2019/20 ANNUAL REPORT
COVID-19 1 PRACTICE GOOD HYGIENE; STAY SAFE 2019/20 ANNUAL REPORT
COVID-19 2 PRACTICE GOOD HYGIENE; STAY SAFE 2019/202019/20 ANNUALANNUAL REPORTREPORT
COVID-19 3 PRACTICE GOOD HYGIENE; STAY SAFE 2019/20 ANNUAL CONTENTS REPORT
PART A: GENERAL INFORMATION 7 NW PROVINCIAL LEGISLATURE GENERAL INFORMATION 7 LIST OF ABBREVIATIONS / ACRONYMS 8 FOREWORD BY THE SPEAKER 11 REPORT OF THE ACCOUNTING OFFICER 13 3. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT 19 4. STRATEGIC OVERVIEW 20 4.1. VISION 20 4.2. MISSION 20 4.3. ORGANISATIONAL VALUES 20 5. LEGISLATIVE AND OTHER MANDATES 20 5.1. MANDATE OF THE LEGISLATURE 21 6. ORGANISATIONAL STRUCTURE 24 7. ENTITIES REPORTING TO THE SPEAKER 30
PART B: PERFORMANCE INFORMATION 31 1. AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES 32 2. OVERVIEW OF INSTITUTIONAL PERFORMANCE 32 2.1. SERVICE DELIVERY ENVIRONMENT 32 2.2. SERVICE DELIVERY IMPROVEMENT PLAN 32 2.3. ORGANISATIONAL ENVIRONMENT 33 2.4. KEY POLICY DEVELOPMENTS AND LEGISLATIVE CHANGES 35 3. STRATEGIC OUTCOME-ORIENTED GOALS 35 4. PERFORMANCE INFORMATION BY PROGRAMME 36 4.1. PROGRAMME 1: ADMINISTRATION 36 4.2. PROGRAMME 2: MEMBERS’ SALARIES 39 4.3. PROGRAMME 3: LEGISLATURE OPERATIONS 42 5. TRANSFER PAYMENTS 47 5.1. TRANSFER PAYMENTS TO PUBLIC ENTITIES 47 5.2. TRANSFER PAYMENTS TO ALL ORGANISATIONS OTHER THAN PUBLIC ENTITIES 48 6. CONDITIONAL GRANTS 49 6.1. CONDITIONAL GRANTS AND EARMARKED FUNDS PAID 49 6.2. CONDITIONAL GRANTS AND EARMARKED FUNDS RECEIVED 49 7. DONOR FUNDS RECEIVED 49 8. CAPITAL INVESTMENT 50 8.1. CAPITAL INVESTMENT, MAINTENANCE AND ASSET MANAGEMENT PLAN 50
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PART C: GOVERNANCE 52 1. RISK MANAGEMENT 53 1.1. RISK MANAGEMENT ACTIVITIES 53 2. FRAUD AND CORRUPTION 53 3. MINIMISING CONFLICT OF INTEREST 54 4. CODE OF CONDUCT 54 5. HEALTH SAFETY AND ENVIRONMENTAL ISSUES 54 6. PORTFOLIO COMMITTEE ON LEGISLATURE AFFAIRS 54 7. PRIOR MODIFICATIONS TO AUDIT REPORTS 55 8. INTERNAL CONTROL UNIT 56 9. INTERNAL AUDIT AND AUDIT COMMITTEE 56 10. AUDIT COMMITTEE REPORT 56 10.1. MEMBERSHIP AND ATTENDANCE 56 10.2. AUDIT COMMITTEE RESPONSIBILITY 58 10.3. THE EFFECTIVENESS OF INTERNAL CONTROL 58 10.4. EFFECTIVENESS OF INTERNAL AUDIT 58 10.5. COMBINED ASSURANCE 59 10.6. PERFORMANCE INFORMATION 59 10.7. RISK MANAGEMENT 59 10.8. IN-YEAR MANAGEMENT AND QUARTERLY REPORT 60 10.9. EVALUATION OF THE FINANCIAL STATEMENTS DATED 31 MARCH 2020 60 10.10. AUDITOR-GENERAL SOUTH AFRICA 60 10.11. COMPLIANCE 60 10.12. CONCLUSION 60
PART D: HUMAN RESOURCE MANAGEMENT 62 1. INTRODUCTION 63 2. HUMAN RESOURCE OVERSIGHT STATISTICS 63
PART E: FINANCIAL INFORMATION 84 1. AUDITOR GENERAL REPORT 85 2. ANNUAL FINANCIAL STATEMENTS 90 ANNEXURE A: NWPL ORGANOGRAM 142
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GENERAL INFORMATION
COVID-19
PRACTICE GOOD HYGIENE; STAY SAFE PART A: GENERAL INFORMATION 2019/20 ANNUAL NWPL GENERAL INFORMATION REPORT
NORTH WEST PROVINCIAL LEGISLATURE PHYSICAL ADDRESS:
New Legislature Building Dr. James Moroka Drive MMABATHO
2735
POSTAL ADDRESS:
Private Bag X2018 MMABATHO
2735
CONTACT DETAILS
TELEPHONE NUMBER/S: (018) 392 7063
FAX NUMBER: (018) 392 7108
EMAIL ADDRESS: [email protected]
WEBSITE ADDRESS: www.nwpl.gov.za
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Abbreviation / Acronym Meaning AC Audit Committee AFS Annual Financial Statements AG Auditor-General AGSA Auditor-General of South Africa AO Accounting Officer ANC African National Congress APP Annual Performance Plan AR Annual Report B. Com Bachelor of Commerce CA Chartered Accountant CASA Chartered Accountant South Africa CD (SA)IoDS Chartered Director South Africa CISA Certified Information Security Auditor CISM Certified Information Security Management CFO Chief Financial Officer CMAC Consequence Management Advisory Committee CRM-Prac Certified Risk Management Practitioner COVID-19 Coronavirus Disease 2019 DA Democratic Alliance DTI Department of Trade and Industry
EFF Economic Freedom Fighters ERP Enterprise Resource Plan FMPPLA Financial Management of Parliament and Provincial Legislatures Act 2009, (Act No. 10 of 2009) as amended GL General Ledger GRAP Generally Recognised Accounting Practices HOA Home Owners Allowance Hon. Honourable HR Human Resource IAA Internal Audit Activity ICT Information and Communication and Technology IFW Irregular, Fruitless and Wasteful IT Information Technology IRMSA Institute of Risk Management of South Africa KPI Key Performance Indicator
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Abbreviation / Acronym Meaning MBA Master of Business Administration M.Com Master of Commerce MEC Member of Executive Council MP Member of Parliament MPL Member of Provincial Legislature MTEF Medium Term Expenditure Framework NA National Assembly N/A Not Applicable NCOP National Council of Provinces NDP National Development Plan NKPI New Key Performance Indicator No. Number NWPL North West Provincial Legislature PAAP Post Audit Action Plan PI Performance Information PFMA Public Finance Management Act PP Public Protector PSETA Public Service Sector Education and Training Authority R Rand RMC Risk Management Committee SA South Africa SADCOPAC Southern Africa Development Community Organisation of Public Ac- counts Committee SALGA South African Local Government Association SAQA South African Qualification Authority SCM Supply Chain Management SDIP Service Delivery Improvement Plan SMS Senior Management Service SOM Sector Oversight Model SOPA State of the Province Address TIDs Technical Indicator Descriptions TR Treasury Regulations VF+ Vryheids Front Plus WHO World Health Organisation
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COVID-19 10 PRACTICE GOOD HYGIENE; STAY SAFE PART A: GENERAL INFORMATION 2019/20 ANNUAL FOREWORD BY THE SPEAKER REPORT
the establishment of the 6th While some targets for the period Legislature, we tabled the Annual under review have not been Performance Plan which set out achieved due to focus strategic areas for the the COVID-19 pandemic in the year and Strategic Plan 2020- fourth quarter, the Legislature 25 that set priorities for the term was able to achieve the planned of the new Administration. Key targets in the past three quarters to our commitments is our drive of the financial year. We have to realise full implementation delivered on our commitments of our constitutional mandate with a number of National and of oversight, law-making and Provincial Bills passed by the to ensure improved public House (especially Money Bills involvement. legislation), oversight through quarterly O Re Bone Re Go Bone It is however important to note that and other Legislature activities in the period under review we did such as Sectoral Parliaments. not introduce new policy position HON S.R. DANTJIE but we mainly covered all areas We ensured public involvement that remained outstanding from in law-making through public SPEAKER OF THE the Strategic Plan of 2015-2020 and hearings and initiated public NORTH WEST managed the transition to the new outreach programmes with the PROVINCIAL LEGISLATURE administration. The programmes aim to create awareness on the that were adopted in this period work of the Legislature. These take this opportunity to present the were mainly compliance matters public functions include Engage IAnnual Report for the North West as required by the Financial with the Legislature and Basadi Re Provincial Legislature for 2019/20 Management of Parliament and Aga Setshaba. financial year. This financial year Provincial Legislature Act, No. 10 of marked the transition from the 5th 2009, as amended. On financial management to the current 6th administration. matters, our focus is to continue It gives me pleasure to reflect on This Legislature will introduce a working hard in strengthening the work of the 5th Legislature and new programme namely, Taking Financial Management Division, to usher in new path for the 6th Legislature to the People to improve internal controls and Administration. enhance and strengthen people’s reduce audit findings. We involvement in the work of the however could not make a In this period under review, Legislature. It will improve efficiency meaningful impact in achieving the Administration team of and transparency in holding the our commitments due challenges the Legislature working with Executive accountable through ranging from lack of commitment the Judiciary facilitated the direct interaction with the public. and consequence management establishment of the 6th We intend to host this programme within management, slow pace Legislature. All thirty-three (33) on rotational basis across the four when coming to investigations Members of the Legislature were districts. During the period under and poor implementation of Audit sworn-in on 22 May 2019. review, the programme was still Committee recommendations. The transition included the election at its conceptual stage and its This happened despite our efforts of the Premier, Speaker, Deputy implementation has been delayed to establish Irregular, Fruitless and Speaker, Chair of Chairs, Chief Whip even further due to the COVID-19 Wasteful Expenditure Governance and Chairpersons of Standing pandemic restrictions imposed Assurance (IFW) Committee and Portfolio Committees. All by Government during the State that reports its findings to the Committees were properly of National Disaster. However, we Consequence Management constituted in accordance with the will continue to explore alternative Advisory Committee, which looks Standing Rules of the Legislature. measures to ensure that we fully into the appropriate actions Induction and training for Members execute our legislative mandate against the implicated officials took place immediately after the and find innovative methods to and accordingly advise the establishment of the Legislature. implement our plans. Speaker. These structures are established to assist in addressing As required by the FMPPLA, after
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irregular expenditure that has within the stipulated time, thanks to Committee supported by the accumulated over the years and the hard work and professionalism Internal Audit for the sound and to minimise, and where possible displayed by both our professional advice given to the curb fruitless and wasteful management, Audit Committee Legislature. expenditure. We however need to and the Auditor General during accelerate the pace at which we this difficult and trying times. We My appreciation also goes to deal with irregular, fruitless and will continue to strive for improved the Legislature staff led by Mr wasteful expenditure and ensure audit outcomes by ensuring that Mosiane for their tireless efforts, that there is proper and faster governance structures remain dedication, professionalism implementation of consequence functional. and support during the term. management. Together we continue to build a The Legislature has for the fifth better workplace and a vibrant We have developed a new consecutive year since 2014 Legislature for the people of the website for the institution, consistently obtained unqualified North West. however we still need to improve audit opinion. This demonstrate our IT infrastructure and ensure that through hard work, strong Thank you! that the Unit is fully resourced administration and political notwithstanding the budget leadership we can achieve constraints. In light of the current more. Part of our priorities going development of COVID-19 we need forward is to deal with all the to modernise our systems in order audit findings and ensure that to get alternative and efficient we all share a common goal ______ways of processing business of and address all concerns raised Hon SR Dantjie the Legislature. The 4th industrial by the Auditor General. The Speaker: North West Provincial revolution requires all institutions attitude of Management towards Legislature to move with speed in updating implementation of Internal and modernising their systems Auditor’s recommendations needs to remain relevant and easily to change and steps be taken to communicate its business. ensure full compliance on this matter. This will help the institution The Financial Management to address many issues and move of Parliament and Provincial towards obtaining clean audit. Legislatures Act (FMPPLA) provides for the Executive Authority to We have started well with the continuously engage the MEC: Standing Committee on Oversight Finance on budget processes. I of the Legislature chaired by Hon am pleased with the cooperation Nel, and we remain committed that we continue to receive from to be held accountable on the MEC of Finance in this regard the affairs of the Legislature. I and we will still continue to engage therefore wish to acknowledge Treasury to ensure that the robust engagements, inputs Legislature is adequately funded. and recommendations of the Standing Committee on Oversight The Auditor-General participated of the Legislature Affairs in the in the training of Members and APP of 2019/20. The resilience of continue to cooperate with the Committee would help the the Legislature in its work. We institution’ management to grow appreciate the efforts and support stronger and provide the support of the office of the Auditor General needed to hold the Executive given to the Legislature and all Accountable. Together we can other government departments. take the Legislature forward. Despite the challenges of Covid-19 Pandemic, our Legislature I also wish to acknowledge managed to complete its audit the sterling work of the Audit
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impact of the pandemic. in the passing of more Resolutions, The National State of Disaster focused oversight activities and the nationwide lockdown and more public participation has impacted negatively on the programmes. performance of the North West Provincial Legislature in the fourth The Organizational Structure quarter of the financial year. review project has been finalised within the financial year and the The NWPL however, managed to second phase of the project, introduce new Rules, policies and which is the implementation of the guidelines to navigate through the structure will commence during crisis and continue with operations the 2020/21 financial year. The aim and provide service to the people. of the project is to position the institution to deliver on its mandate The Legislature managed to with an effective and efficient maintain an unqualified audit Administration. outcome with findings. This is MR. O.S MOSIANE considered a positive progress, The institution continues to forge particularly when considering and strengthen relations with key SECRETARY TO THE the reduced audit finding and institutions such as the North West NORTH WEST non-incurrence of unauthorised department of finance, PSETA, etc. PROVINCIAL LEGISLATURE expenditure. Notably, the Auditor The intention is to exchange best General has indicated that the practice and venture into new institutions financial stability has initiatives. These relations will also t is my greatest pleasure to improved. enhance the performance of the present the North West Provincial Legislature towards achieving ILegislature (NWPL) Annual Report While the audit outcome shows good and clean administration. for the 2019/2020 financial year. As reduction in findings, the institution we present the report, the NWPL needs to improve its control For the year under review, the is mindful of the disaster that has environment, especially within the Institution successfully forged befell the world and the country supply chain management; ICT and partnership with the Public Sector towards the end of the financial human resource management in Education and Training Authority year. order to avoid irregular, fruitless (PSETA) on a twelve-month and wasteful expenditure as well as Procurement and Leadership In January 2020, the World misstatements in its performance Learnerships Project. Fifty (5O) Health Organization declared information. With this performance Unemployed disadvantaged the outbreak of a coronavirus trend, the Legislatures good youth (Orphans) from across the disease as a public emergency of governance and accountability Province are beneficiaries of this International Concern. The South will indeed reach the desired state. Project. African Government also followed suit and declared it as a national The Institution continues to On its drive to attain clean disaster in March 2020. This progress towards achieving its audit outcome, the institution announcement led to introduction mission of providing effective signed a MOU with the Provincial of various measures to curb the administrative support to Department of Finance, on the spread of the disease. Members of the Legislature and departments’ initiative to assist the general public, through provincial institutions to improve We pay homage to public servants; strengthened oversight; improved their audit findings. Doctors, Nurses, Social Workers public participation and robust who have put their lives at risk to law-making processes. The NWPL organised and conducted save and serve the nation from this an induction programme with all novel disease. We acknowledge During the year under review, the NWPL Members in order to equip the decisiveness of the Cabinet led Legislature began to see a shift and prepare them to fulfil their by the State President in ensuring towards robust outcome-based Constitutional mandate in the that the country minimises the oversight initiatives, which resulted sixth term. Tools of trade were
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dispatched to Members to enable Lastly, I would like to express my them to operate remotely and appreciation to the Management carry out their responsibilities. Team and the staff members for their unconditional support. These tools of trade became more critical and helpful during the virtual Committee meetings and “Tsela kgopo ga e latse nageng”. Sitting of the Legislature during the lockdown.
The 1st phase of ORACLE stabilization project was successfully completed during the financial year. Success of Mr. O.S. Mosiane the 1st phase is evidenced by the Secretary to the NWPL ability of the system to produce key reports, such as, the general Date 30 September 2020 ledger, trial balance, balance sheet and income statement, as well as the debtors and creditors aging reports.
Although there is still much to be done to address the Oracle system challenges, the planned implementation of 2nd phase during the 2020/21 financial year, will hopefully resolve outstanding challenges. The aim is to ultimately address the existing reliance on consultants, especially on financial reporting and ICT technical support.
My greatest gratitude goes to the Honourable Speaker, Mme S.R. Dantjie for her leadership, support and guidance.
My sincere thanks goes out to the Standing Committee on Oversight of Legislature Affairs for their robust engagement and holding the Legislature accountable for the resources allocated.
I would similarly like to acknowledge the support and advice given by the Audit and the Risk Committees. Their wealth of experience and commitment have continued to improve and empower the institutions’ operations.
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Overview of the Financial Results
Departmental 2019/2020 2018/19 Receipts Estimate Actual (Over)/ Estimate Actual (Over)/ Amount Under Amount Under Collected Collection Collected Collection
R’000 R’000 R’000 R’000 R’000 R’000 Transfers 501 181 502744 (2 403) 561 723 540 799 22 404 received Interest, 1 563 2 165 (602) 1 480 1 965 (485) dividends and rent on land Total 502 744 505 749 (3 005) 563 203 542 764 20 439
Programme Expenditure
Programme 2019/2020 2018/19 Name Final Actual (Over)/ Final Actual (Over)/ Appro Expend Under Appro Expend Under priation iture Expenditure priation iture Expen diture
R’000 R’000 R’000 R’000 R’000 R’000 1. Administration 284 379 232 010 52 370 356 589 349 284 7 305
2. Member’s 44 837 32 094 12 743 31 155 28 991 2 164 Salaries 3. Legislature 173 528 168 980 4 547 174 459 188 417 (12 958) Operations Total 502 744 433 084 69 660 563 203 566 692 (3 489)
The above appropriation relates to actual cash payments and does not include GRAP accruals and non- cash transactions.
Virements / Roll overs
In terms of Section 23 of the FMPPLA, the Provincial Legislature is not required to surrender unspent funds; hence the Legislature does not apply for roll-overs. However, Section 18 of the FMPPLA states that the Legislature must appropriate any monies that were appropriated in the previous year but not spent. As a result, the Legislature appropriated the 2018/19 unspent funds during the adjustment budget based on the budgetary pressures identified during the 2019/20 financial year.
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Unauthorised, Irregular, Fruitless and Wasteful Expenditure
Unauthorised Expenditure
The NWPL did not incur any unauthorised expenditure for the 2019/20 financial year. A request for the condonation of the unauthorised expenditure for the prior periods has already been submitted to the Provincial Treasury for consideration. Unauthorised expenditure to the value of R9 million has been derecognized and a prior year error is recorded in the Annual Financial Statements.
Irregular Expenditure
The NWPL had an opening balance of R310 million at the beginning of the 2019/20 financial year. During the 2019/20 financial year, irregular expenditure of R40.7 million was incurred. This irregular expenditure is mainly due to the contractual obligations from prior years, which continued into the current financial year. The contractual irregular expenditure accounts for R32 million of the total irregular expenditure incurred in the current financial year. An amount of R5.4 million relates to active contracts that could not be extended prior to expiry. The R2.8 million of non – contracts irregular expenditure is attributable to split orders and instances whereby the required number of quotations were not sourced . An amount of R2.8 million of the irregular expenditure incurred in the prior years was investigated and derecognised. Investigation on the irregular expenditure is ongoing wherein R348 million is still been processed under.
Fruitless and Wasteful Expenditure
The NWPL incurred an amount of R850 435 in the prior years. In the 2019/20 financial period, the NWPL incurred Fruitless and Wasteful expenditure of R471 436, which includes R6 937 as a result of the AGSA interest on overdue accounts, R80 312 for traffic fines, cancellations and repairs of damaged rental vehicles, R 4 709 worth of interest on the late payments of the rental offices of the National Council of Province (NCOP) in Cape Town, as well as an amount of R379 478 paid as interest on the settlement of account with the service provider.
The fruitless and wasteful expenditure was reduced by R170 176 during the financial year, as a results of debt acknowledgment by responsible officials and in respect of interest charged by the AGSA written off.
The balance at year-end amounted to R1.151 million.
Future plans of the Institution
- To strenghthen and improve the control environment by introducing internal policies and systems
- The implementation of the NWPL approved organisational structure in the 2020/21 financial year.
Public Private Partnerships
- N/A
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Discontinued activities / activities to be discontinued
- N/A
New or proposed activities
- N/A
Supply Chain Management
- A Supply Chain Management (SCM) checklist has been developed and implemented, and a workshop on the detection/identification and treatment of irregular expenditure has been conducted.
- In addition, the SCM staff, as well as the members of the Bid Evaluation and the Bid Adjudication Committees received training (compliance with the local content requirements for the sector) as designated by the DTI.
- The NWPL has added two non-SCM members to the Internal Bid Evaluation Committee (goods and services above R30 000.00 but below R500 000.00) to strengthen the efficiency and effectiveness of the committee; and
- All deviations from the SCM processes have been approved by the Accounting Officer in accordance with the relevant sections for exemptions, exceptional and emergency circumstances.
Implementation of GRAP standards
- In the process of compiling the AFS, an audit file is prepared with all the supporting documentation to substantiate the AFS and the disclosure notes. All parties that are responsible for reviewing the AFS are provided with a duplicate audit file;
- The 2019/20 AFS are in full compliance with the GRAP statements that became effective in 2019;
- The AFS are presented to management and the Audit Committee for review and inputs; and
- The AFS also submitted to the Office of the Accountant General in the Provincial Treasury and Internal Audit.
Gifts and donations received in kind from non-related parties
- NWPL has recieved an amount of R840 000.00 from PSETA as funding for the learnership programme.
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Exceptions and deviations received from National Treasury
- None
Events after the reporting date
- None
______Mr. O. S. Mosiane Date: 30 September 2020
Secretary to the NWPL
COVID-19 18 PRACTICE GOOD HYGIENE; STAY SAFE PART A: GENERAL INFORMATION 2019/20 ANNUAL REPORT STATEMENT OF RESPONSIBILITY & CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT
3. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT
To the best of my knowledge and belief, I confirm the following:
- All information and amounts disclosed throughout the annual report are consistent. The annual report is complete, accurate and is free from any omissions.
- The annual report has been prepared in accordance with the guidelines on the annual report as issued by the National Treasury.
- The AFS (Part E) have been prepared in accordance with the Generally Recognised Accounting Practices (GRAP) and the relevant frameworks and guidelines issued by the National Treasury.
- The Accounting Officer is responsible for the preparation of the annual financial statements and for the judgements made in this information.
- The Accounting Officer is responsible for establishing and implementing a system of internal control that has been designed to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information and the annual financial statements.
- The external auditors are engaged to express an independent opinion on the annual financial statements.
- In my opinion, the annual report fairly reflects the operations, the performance information, the human resources information and the financial affairs of the institution for the financial year ended 31 March 2020.
Yours faithfully
______Date: 30 September 2020
Mr. O. Mosiane Secretary to the NWPL
COVID-19 19 PRACTICE GOOD HYGIENE; STAY SAFE PART A: GENERAL INFORMATION 2019/20 ANNUAL REPORT STRATEGIC OVERVIEW
4. STRATEGIC OVERVIEW
4.1. VISION
Building a United, Non-Racial, Non-Sexist, Democratic and Prosperous society in the North West Province.
4.2. MISSION
The North West Provincial Legislature aims to provide services to the people of North West Province by ensuring:
- A vibrant Legislature that is responsive to and addresses the challenges of development facing our people;
- An Accountable Executive by strengthening oversight on the promises made to our people by government;
- Promotion of efficient and healthy co-operative governance between the three spheres of government; and
- A creative, effective, efficient and transformative administration that helps the Members of the Legislature to fulfil their constitutional mandate.
4.3. ORGANISATIONAL VALUES
- Integrity;
- Accountability;
- Responsiveness;
- Openness; and
- Teamwork.
5. LEGISLATIVE AND OTHER MANDATES
5.1. MANDATE OF THE LEGISLATURE
The North West Provincial Legislature’s mandate is derived from the Constitution of the Republic of South Africa (Section 104).
Members of the Provincial Legislature are elected to represent the people and their constitutional mandate is to ensure Government by the people. The core functions of the Provincial Legislature are:
- To pass laws for the North West Province;
COVID-19 20 PRACTICE GOOD HYGIENE; STAY SAFE PART A: GENERAL INFORMATION 2019/20 ANNUAL REPORT LEGISLATIVE & OTHER MANDATES
- To conduct oversight over the Executive and other Organs of State; and
- To promote public participation.
Legislative Mandates
The below stated are the main Acts, Regulations and Frameworks that the Legislature is bound to adhere to.
- The Constitution of the Republic of South Africa;
- The Financial Management of Parliament and Provincial Legislatures Act 2009, (Act No. 10 of 2009) as amended;
- Amendments to the Financial Management of Parliament and Provincial Legislatures Act, 2009, (inclusive of Supply Chain Management and other Section 65 regulations);
- Formalising the Legislative Sector through legislation (Legislative Sector Service Bill);
- The Independent Commission for the Remuneration of Public Office Bearers Act, 1997 (Act 92 of 1977);
- Treasury Regulations, Frameworks, Guides and Best Practices;
- Division of Revenue Act;
- Basic Conditions of Employment Act, 1997 (Act No. 75 of 1997);
- Employment Equity Act, 1998 (Act No.55 of 1998);
- Labour Relations Act, 1995 (Act No.66 of 1995);
- Promotion of Access to Information Act, 2000 (Act No. 3 of 2000);
- Promotion of Administrative Justice Act, 2000 (Act No. 2 of 2000);
- Critical Infrastructure Protection Act 8 of 2019 ;
- Political Party Funding Policy;
- Ministerial Handbook ;
- Mandating Procedures Act, 2008 (Act No.52 of 2008);
- Legislative Sector Oversight Model;
- The Preferential Procurement Policy Framework Act, 2000 (Act No.5 of 2000);
- The Broad Based Black Economic Empowerment Act, 2004 (Act No.53 of 2004);
- North West Appropriation Act;
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- North West Adjustment Appropriation Act;
- The National Archives of South Africa Act, 1996 (Act No.43 of 1996);
- Skills Development Act, 1998 (Act No.97 of 1998);
- Compensation for Occupational Injuries and Diseases Act, 1993 (Act No. 1993)
- Occupational Health and Safety Act, 1993 (Act No. 85 of 1993); and
- National Strategic Intelligence Act, 2002 (Act No.67 of 2002).
Best Practices
- Treasury Framework for Annual Report;
- King IV Report on Governance for South Africa 2009;
- International Standards for the Professional Practice of Internal Auditing; and
- COBIT 5.
Policy Mandates
- North West Medium-Term Strategic Framework;
- North West Tabling Guide;
- Legislative Sector Oversight Model;
- Legislative Sector Public Participation Model;
- North West Oversight Model;
- North West Members Enabling Facilities Policy; and
- North West Member’s Code of Conduct.
The institution adhered to Legislature policies that were adopted and approved.
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COVID-19 23 PRACTICE GOOD HYGIENE; STAY SAFE PART A: GENERAL INFORMATION 2019/20 ANNUAL REPORT MEMBERS OF THE NWPL
6. ORGANISATIONAL STRUCTURE
Hon. Sussana Dantjie (ANC) Speaker of the North West Provincial Legislature
Hon. Mmoloki Cwaile Hon. Viola Motsumi Hon. Paul Sebegoe (ANC) (ANC) (ANC)
Chairperson of Chairpersons & Deputy Speaker of the Chief Whip of the Chairperson: North West Provincial Legislature North West Provincial Legislature Legislative Review & Implementation of Resolution of the House
Hon. Job Dliso Hon. Onica Medupi Hon. Bitsa Lenkopane Hon. Kabelo Mataboge (ANC Whip) (ANC) (ANC) (ANC)
Chairperson: Chairperson: Chairperson: Economic Chairperson: Standing Committee on Community Safety and Development, Environment & Education, ,Arts, Culture Provincial Public Accounts Transport Management & Tourism, Agriculture & Rural and Sports Development Public Works, Roads Development
COVID-19 24 PRACTICE GOOD HYGIENE; STAY SAFE PART A: GENERAL INFORMATION 2019/20 ANNUAL REPORT MEMBERS OF THE NWPL
Hon. Aron Motswana Hon. Priscilla Williams (ANC) (ANC)
Chairperson: Premier, Chairperson: Finance, Corporative Health and Social Governance, Human Development Settlements & Traditional Affairs
Hon. Matshidiso Botswe Hon. Papiki Babuile Hon. Kelebogile Kerileng Hon. Lebogang Xaba (EFF) (EFF) (EFF) (EFF)
EFF Leader EFF Whip Member of the NWPL Member of the NWPL
Hon. Betty Diale Hon.Modiegi Dikolomela (EFF) (EFF)
Member of the NWPL Member of the NWPL
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Hon. Winston Rabotapi Hon. Freddy Sonakile Hon. Gavin Edwards Hon. Jacqueline Theologo (DA) (DA) (DA) (DA)
DA Leader DA Whip Member of the NWPL Member of the NWPL
Hon. De Wet Nel Hon. Erns Kleynhans (FF Plus) (FF Plus)
FF Plus Leader & Chaiperson: FF PLus Whip Standing Committee on Legislative Affairs
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Hon. Eric Riaan Landsman Hon. Simon China Dodovu Hon. Tebogo Constance Modise
North West Provincial Whip Chairperson of Select Committee on Chairperson of Select Committee Cooperative Governance & on Land Reform, Environment, Traditional Affairs, Water & Mineral Resources & Energy Sanitation and Human Settlements
Hon. Carin Visser Hon. Betta Lehihi Hon. Stephanus Du Toit
Member of Parliament Member of Parliament Member of Parliament
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Premier Job Mokgoro (ANC)
Premier of the North West Province
MEC Motlalepule Rosho The Late (ANC) MEC Gordon Kegakilwe (ANC) Leader of Government Business & MEC for MEC for Department of Cooperate Department of Provincial Treasury Governance, Human Settlements & Traditional Affairs
MEC Desbo Mohono MEC Gaoage Molapisi MEC Keneetswe Mosenogi MEC Madoda Sambatha (ANC) (ANC) (ANC) (ANC) MEC for Department of MEC for Department of MEC for Department of MEC for Department of Agriculture & Rural Public Works and Roads Economic Development, Health Development Environment Conservation & Tourism
MEC Boitumelo Moiloa MEC Tsotso Tlhapi MEC Wendy Matsemela MEC Sello Lehari (ANC) (ANC) (ANC) (ANC) MEC for Department of MEC for Department of MEC for Department MEC for Department of Social Sports, Arts & Culture Education Community Safety and Development Transport Management
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7. ENTITIES REPORTING TO THE SPEAKER
No entities report to the Executive Authority.
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PERFORMANCE INFORMATION
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PRACTICE GOOD HYGIENE; STAY SAFE PART B: PERFORMANCE INFORMATION 2019/20 ANNUAL REPORT
1. AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES The AGSA currently performs the necessary audit procedures on the performance information to provide reasonable assurance in the form of an audit conclusion. The audit conclusion on the performance against predetermined objectives will be included in the report to management, with findings if any, being reported under the Predetermined Objectives heading in the Report on other legal and regulatory requirements section of the auditor’s report.
Refer to pages 85 - 89 of the Report of the Auditor General, published as Part E: Financial Information.
2. OVERVIEW OF INSTITUTIONAL PERFORMANCE
2.1. SERVICE DELIVERY ENVIRONMENT
The North West Provincial Legislature is a legislative arm of government charged with the responsibilities of Law-making, Oversight and Public Participation.
2.2. SERVICE DELIVERY IMPROVEMENT PLAN
The NWPL does not have a Service Delivery Improvement Plan.
2.3. ORGANISATIONAL ENVIRONMENT
The Legislature houses the political representatives of the people and its mandate is to conduct oversight over the Provincial Government and other Organs of the State, and to promote public participation and law-making. The Legislature has thirty-three (33) elected public representatives from the following political parties:
Name of Political Party Number of Public Representatives ANC 21 EFF 06 DA 04 VF + 02 Total 33
2.3.1. Organisational Review Process
The Hon. Speaker and the Secretary signed off the newly developed Organisational Structure in July 2019 as part of the Organisational Review Process. Subsequent to that, other due processes prior to implementing the new Organisational Structure (Migration of Staff to the new Organisational Structure) were also undertaken, which included breaking down costing to the lowest level and analysing the impact of the post per person. The new Organisational Structure will be implemented in the new financial Year.
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2.3.2. Oracle ERP System
The 1st phase of the ORACLE stabilization project was successfully completed during the financial year. Success of the 1st phase is evidence by the ability of the system to produce key reports such as the General Ledger, Trial Balance, Balance Sheet and Income Statement, as well as the Debtors and Creditors Aging reports.
2.3.3. GRAP Implementation
- The NWPL is fully compliant with GRAP.
Annual Financial Statements (AFS):
- The Annual Financial Statements (AFS) 2019/2020 have been prepared in terms of GRAP.
Accounting Policies
- The financial statements have been prepared in accordance with the Standard of Generally Recognised Accounting Practice (GRAP), issued by the Accounting Standard Board and in accordance with Section 56 of the FMPPLA. These financial statements have been prepared in terms of the accrual basis of accounting and are in accordance with historical cost convention as the basis of measurement. Assets, liabilities, revenue and expenses were not offset, except where offsetting was either required or permitted by the Standard of GRAP. A summary of the significant accounting policies, which have been consistently applied in the preparation of these financial statements are disclosed. These accounting policies are consistent with the previous financial statements.
AFS Disclosure Notes:
All Receivable, Payables and Provisions are accounted for in terms of GRAP standards and will be disclosed in the AFS.
Additional disclosure such as the Key Management Personnel, Contingent Assets / Liabilities, Property Plant and Equipment, Commitments and other applicable information are disclosed in the AFS in compliance with GRAP.
2.3.4. Implemented recommendations of the Standing Committee on the Oversight of the NWPL
The Standing Committee on the Oversight of the Legislature is the Committee tasked with conducting oversight over the North West Provincial Legislature. During the year under review, the Legislature presented its non-financial and financial performance reports for the 2019/20 financial year to the Committee. This was done on a quarterly basis and with the recommendations received from the Committee, the Legislature maintained its progress towards achieving planned targets and accomplished this within the allocated budget.
The following recommendations emanating from the Oversight Committee meetings were implemented:
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- The organisational skills audit report to be submitted to the Committee;
- The NWPL to write a letter to the Office of the Premier regarding the progress on the Section 100 intervention;
- The NWPL to submit a report on the Oracle system health check to resolve the failure of Oracle to produce reliable financial reports for the purposes of compiling the Legislature’s AFS;
- The NWPL overall MPL’s security measures in the Institution and the Status of Lowe village (during public participation events and in the Legislature.);
- The NWPL infrastructure report on Phase 1 with costs and the delays on the Refurbishment of the Chamber; and
- Post Audit Action Plan (PAAP) to be developed and monitored to address the weaknesses identified by the Auditor-General.
2.3.5. Strengthening Governance
The Consequence Management Advisory Committee
The Executive Authority extended the term of the Consequence Management Advisory Committee (CMAC) members by three years due to the slow investigation of the Irregular, Fruitless & Wasteful Expenditure. For the year under review the CMAC has not recommended any expenditure for condonation, as the Irregular, Fruitless and Wasteful Expenditure and Governance Assurance Committee was still conducting the investigations.
The Information and Communication Technology (ICT) Steering Committee:
The institution established the Information and Communication Technology (ICT) Steering Committee which comprises of five (5) members of management and two (2) external members, and two (2) advisory members from Internal Audit (internal and external members). The committee is chaired by an external member.
The Irregular, Fruitless and Wasteful Expenditure (IFW) Governance Assurance Committee
The IFW Expenditure and Governance Assurance Committee was established to review all current and previous financial years’ irregular, fruitless and wasteful expenditure. The Committee comprises six(6) members, namely one (1) external chairperson and five (5) internal members.
The committee met twice during the 2019/20 financial year, during which time the IFW expenditure items were investigated. Recommendations were issued to the Accounting Officer regarding the strengthening of controls to prevent the IFW expenditure from occurring in future.
Where staff members were believed to be guilty of contravening controls that led to a financial loss, the Committee recommended that such members be formally charged and appear before the institution’s Disciplinary Committee. If found guilty, the staff member would be required to reimburse the Legislature the loss of funds.
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2.3.6. 2019/2020 Members Gratuity Fund
During the 2019/20 the NWPL secured an earmarked allocation of R11 million and subsequently disbursed payments in respect of the Exit Gratuity (R4.2 million) and Pension Gratuity (R7 million) to non-returning MPLs. The Exit Gratuity is given effect by Proclamation No. 31597 of 2008, while the Pension Gratuity relates to Proclamation No. 40182 of 2016.
2.3.7. Democracy enhancement
In 2019 / 20 the NWPL received an additional funding of R15 million for the purposes of Democracy Enhancement and for the preparations of the 2019 National Elections.
2.4. KEY POLICY DEVELOPMENTS AND LEGISLATIVE CHANGES
2.4.1. Amendment of the Financial Management of Parliament and Provincial Legislatures Act (FMPPLA)
Following the Constitution, the Legislature is required to comply with other relevant legislation like the FMPPLA, which applies to Parliament and the nine Provincial Legislatures as stated in Section 2 and 3. Section 2 specifically serves to ensure transparency, accountability and sound management of the revenue, expenditure, assets and liabilities of Parliament, whereas Section 3 implies the Act as applicable to the Provincial Legislatures.
The FMPPLA is currently under review, which was necessitated by identified short-comings on matters of governance and a need to adequately streamline the roles of functionaries established under the Act. The Review is currently before the National Parliament, which will give effect to Section 76 consultation as prescribed by the Constitution.
2.4.2. The NWPL 6th Administration Induction Manual
The NWPL organised and conducted an induction programme with all Members to equip and prepare them to fulfil their Constitutional mandate in the sixth term. The induction covered aspects such as Holding the Executive Accountable and Conduct as Office Bearers.
Tools of trade dispatched to Members enabled them to operate remotely and to carry out their responsibilities. Seasoned and experienced institutions were sourced during the induction period.
3. STRATEGIC OUTCOME-ORIENTED GOALS
The strategic goals of the Legislature are as follows:
- To provide a sound provincial law-making framework;
- To promote public participation in legislative processes;
- To exercise an oversight function; and
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- To ensure business excellence within the Legislature.
4. PERFORMANCE INFORMATION BY PROGRAMME
4.1. PROGRAMME 1: ADMINISTRATION
Purpose of the Programme
To enable the administration to render support services that will enable Members of the Provincial Legislature and employees to fulfil their constitutional obligations. This programme has an internal focus.
Programme 1 : Administration consists of eight (8) sub-programmes, namely:
- Sub-programme: Office of the Speaker;
- Sub-programme: Office of the Secretary;
- Sub-programme: Legal and Labour;
- Sub-Programme: Financial Management;
- Sub-programme: Corporate Services,
- Sub-programme: Internal Audit;
- Sub-programme: Risk Management; and
- Sub-programme: Infrastructure and Maintenance.
Strategic objective
To provide effective and efficient strategic leadership and administrative support for the fulfilment of the Legislature’s Constitutional Mandate.
4.1.1. Strategic Objectives, Performance Indicators Planned Targets and Actual Achievements
Summary of Achievements
1. The 1st phase of the Oracle stabilization project was successfully completed during the financial year. Success of the 1st phase is evident by the ability of the system to produce key reports such as the General Ledger, Trial Balance, Balance Sheet and Income Statement, as well as the Debtors and Creditors Aging reports.
2. The NWPL approved the Organization Structure in July 2019. Other due processes prior to mplementing the new Organisational Structure (Migration of Staff to the new Organisational Structure) were also undertaken, which included breaking down costing to the lowest level and analysing the impact of post per person. Full implementation is planned for the new Financial Year.
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3. The NWPL has successfully forged a partnership with the PSETA on a twelve-month Procurement and Leadership Learnerships Project. Fifty (5O) unemployed disadvantaged youth (orphans) from across the Province are beneficiaries of this Project. The Project is both theoretical and practical with various Municipalities and Provincial Departments being the host Employer in this regard.
Strategic Objectives: Programme 1
Strategic Reported Annual Actual Devia- Comment on Deviation objectives Outcome Planned Achieve- tion from Target ment Planned o Actual
2018/19 2019/20 2019/20 1. To provide 39 31 28 3 - Infrastructure Management effective and targets for the entire Financial efficient strategic Year were not achieved as leadership and planned due to the following administrative reasons: support for the fulfilment of the - The Project Tender Legislature’s Advertisement was closed on Constitutional the 31st of January 2020; Mandate.. - Evaluation could not be finalized during the quarter due to matters that needed to be referred back for further scrutiny and confirmation before concluding the evaluation process; and
- The disruption by members of the community which led to the intervention by the Public Protector.
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Performance Indicators: Programme 1
Performance Actual Actual Actual Planned Actual Deviation Comment Indicator Achieve Achieve Achieve Target Achieve from on ment ment ment ment Planned Deviation to Actual
2016/17 2017/18 2018/19 2019/20 2019/20 2019/20 1.1 Number of New PI New PI 4 4 4 - None Legislature Programmes approved by the Speaker. 1.2 Number of 42 29 29 24 24 - None compliance reports approved in line with the FMPPLA requirements.
1.3 Number New PI 8 6 - - - None of project activities of the Extension of the East Wing Office block completed. 1.4 Number New PI New PI New PI 3 - 3 The target of project was not activities of the achieved due Refurbishment to final project of the specification Chamber – review and Phase One approvals; also delay the procurement processes for contractor’s appointment. Legend:
New PI: New Performance Indicator. The audited figures from previous financial years are not available because the KPI was created in the following year(s).
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4.1.2. Strategy to overcome areas of underperformance
The NWPL will engage with the Infrastructure Unit in the Department of Finance to develop a proper implementation plan with clear and achievable targets in the 2021/22 financial year.
4.1.3. Changes to planned targets
For the year under review, no changes occurred to the performance indicators and targets.
4.1.4. Linking performance with budgets
Details per 2019/20 2018/19 Sub-Programme Final Actual Variance Final Actual Appro Expend Appro Expend priation iture priation iture R’000 R’000 R’000 R’000 R’000 1.1 Office of The Speaker 17 950 15 294 2 656 16 196 15 771 1.2 Office of The Secretary 55 444 54 251 1 193 40 005 35 289 1.3 Financial Management 152 800 107 389 45 411 233 826 232 360 1.4 Corporate Services 50 895 48 216 2 679 59 740 59 118 1.5 Internal Audit 7 291 6 860 431 6 822 6 746 Total 284 380 232 010 52 370 356 589 348 284
4.2. PROGRAMME 2: MEMBERS’ SALARIES
Purpose of the Programme
The purpose of the programme is to provide for the payment of Members’ Salaries in terms of the prescripts of the law dealing with the remuneration of public office bearers and further ensures that Members are given the necessary support that will allow them to effectively and efficiently perform their constitutional mandate. This programme also ensures support for Members is provided through the implementation of the Members Enabling Facilities Policy.
The programme also ensures the implementation of Members exposure to parliamentary systems of other countries and capacity-building programmes for Members.
Programme: 2 Members’ Salaries consist of the following sub-programmes, namely:
- Sub Programme: Logistics Members; and
- Sub Programme: Members Exposure.
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Strategic Objective
To provide enabling support services for Members of the Provincial Legislature.
4.2.1. Strategic Objectives, Performance Indicators Planned Targets And Actual Achievements
Summary of Achievement
There was a smooth transition of all activities from the 5th Administration to the 6th Administration hosted by the NWPL, starting with the swearing-in of new Members, the election of the Premier, Speaker and Deputy Speaker, and the Chief Whip of the House. The North West Provincial Legislature established Committees and elected respective Chairpersons as per the North West Provincial Legislature Standing Rules Chapter 10 Sub-Section 147 – 167.
Strategic Objectives: Programme 2
Strategic objectives Audited Annual Actual Devia- Comment on outcome Planned Achieve- tion from deviation Target ment planned to actual
2018/19 2019/20 2019/20 2019/20 1. To provide 6 4 6 2 The Legislature received enabling support invitations to attend services for exposure programs, namely: Members of Westminster Seminar in the Provincial London and SADCOPAC Legislature. Conference held in Johannesburg.
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Performance Indicators Programme 2: Members’ Salaries
Performance Actual Actual Actual Planned Actual Devia- Comment on Indicator Achieve- Achieve- Achieve- Target Achieve- tion from Deviation ment ment ment ment Planned
2016/17 2017/18 2018/19 2019/20 2019/20 2019/20 1.1 Number of 5 6 3 4 6 2 The Legislature exposure received ogrammes invitations facilitated to attend for MPL’s. exposure programmes, namely: Westminster Seminar in London and SADCOPAC Conference held in Johannesburg
4.2.2. Strategy to overcome areas of under performance
- None
4.2.3. Changes to planned targets
For the year under review, no changes occurred to the performance indicators and targets.
4.2.4. Linking performance with budgets
Direct Charge 2018/19 2017/18 Final Actual Final Actual Final Appropria- Expendi- Appropria- Expenditure Appropriation tion ture tion
R’000 R’000 R’000 R’000 R’000 Member’s Salaries 44 837 32 094 12 743 31 155 28 991 Total 44 837 32 094 12 743 31 155 28 991
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4.3. PROGRAMME 3: LEGISLATURE OPERATIONS
Purpose of the Programme
This Programme is concerned with the core business of the Legislature in terms of law-making, oversight and public participation.
Programme 3 Legislature Operations consists of five (5) sub-programmes, namely:
- Sub-Programme: House Proceedings;
- Sub-Programme: Committees Services;
- Sub-Programme: NCOP Liaison Services;
- Sub-Programme: Public Participation; and
- Sub-Programme: Research, Library and Information Services.
Strategic Objective
To provide strategic support in relation to improving the livelihood of the North-West citizenry through effective law-making, oversight and public participation.
4.3.1. Strategic Objectives, Performance Indicators Planned Targets and Actual Achievements
Summary of Achievements
1. The NWPL processed and adopted the 2019/20 North West Second Adjustment Appropriation Bill 2019 to ensure proper appropriation of resources for better service delivery.
2. The NWPL processed and adopted the 2020 – 2025 Departmental Strategic Plans, Office of the Premier, North West Provincial Legislature and the State -Owned Entities. All Strategic Documents were analysed through the Sector Oversight Model imperatives and contracting processes.
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Strategic Objectives: Programme 3
Strategic objectives Reported Annual Actual Deviation Comment on Outcome Planned Achieve- from Deviation Target ment Planned to Actual
2018/19 2019/20 2019/20 2019/20 1. To provide strategic 695 372 387 15 -Portfolio and Standing support in relation Committees conducted to improvement additional oversight of livelihood of activities. the North West citizenry through -The NWPL passed the effective law-making 2019/20 Appropriation Bill oversight and public after the Elections. participation. -The Second Adjustment Appropriation Bill 2019 which was a special request made by MEC responsible for Treasury.
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Performance Indicators: Programme 3
Performance Actual Actual Actual Planned Actual Devia- Comment on Indicator chieve- chieve- Achieve- Target Achieve- tion Deviation ment ment ment ment from Planned to ac- tual
2016/17 2017/18 2018/19 2019/20 2019/20 2019/20
1.1 Number of 109 103 76 86 88 2 Additional Strategic Strategic Documents Documents tabled. were tabled late.
-Department of Health Annual Report 2017/18
-Office of the Premier Annual Report 2018/19
1.2 Number of 4 6 11 1 1 - N/A mandates on NCOP Bills adopted. 1.3 Number of 90 118 156 51 44 7 Public partici- Public pation planned Participation programmes programmes for the last conducted. quarter were cancelled due to the COVID-19 National Disas- ter.
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Performance Actual Actual Actual Planned Actual Devia- Comment on Indicator chieve- chieve- Achieve- Target Achieve- tion Deviation ment ment ment ment from Planned to ac- tual
2016/17 2017/18 2018/19 2019/20 2019/20 2019/20
1.4 Number of 37 42 123 74 80 6 Additional re- Research search studies Studies were submitted conducted. due to previous financial years Departmental Annual and Quarterly Re- ports that were tabled late, namely:
Office of the Premier, De- partments of Health and Community Safety.
1.5 Number of 4 6 3 2 3 1 The NWPL Bills Passed in passed the the House. Second Adjust- ment Appropri- ation Bill 2019 which was a special request made by MEC responsible for Treasury. 1.6 Number of New PI 189 227 105 117 12 - Portfolio Committee and Standing Oversight Committees report tabled. conducted ad- ditional over- sight activities that were not planned for.
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Performance Actual Actual Actual Planned Actual Devia- Comment on Indicator chieve- chieve- Achieve- Target Achieve- tion Deviation ment ment ment ment from Planned to ac- tual
2016/17 2017/18 2018/19 2019/20 2019/20 2019/20
1.7 Number of 69 55 99 53 54 1 NWPL moni- Resolutions tored 1 addi- monitored tional House Resolution, namely:
House Res- olution No. 4 on First Quar- ter Report of Department of Arts, Culture Sports and Rec- reation 2019/20. Legend:
New PI: New Performance Indicator. The audited figures from previous financial years are not available because the KPI was created in the following year(s).
4.3.2. Strategies to overcome areas of under-performance
The NWPL will develop and implement guidelines for continuous business process amid National Disaster from the lessons learnt during the COVID-19 pandemic.
4.3.3. Changes to planned targets
Due to the transition from the 5th Administration, as well as the 6th Administration rising toward the end of June 2019, some performance indicators and targets were reviewed.
4.3.4. Linking performance with budgets
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Details per Sub- 2019/20 2018/19 =Programme Final Actual Variance Final Actual Appropria- Expenditure Appropriation Expenditure tion R’000 R’000 R’000 R’000 R’000 1.1 Logistics 52 903 53 133 231 63 435 64 956 Members 1.2 Exposure to Parlia- 6 689 2 378 4 311 11 551 11 329 mentary Services 1.3 House 20 833 21 403 210 17 260 17 087 Proceedings 1.4 Committee 31 123 32 232 1 109 30 849 34 254 Services 1.5 NCOP Liaison 4 644 4 624 19 4 673 4 372 1.6 Public 40 909 39 114 1 795 33 737 41 879 Participation 1.7 Library, Research 16 427 16 455 28 13 945 14 540 and Information Services Total 173 528 168 981 4 547 175 459 188 417
5. TRANSFER PAYMENTS
5.1. TRANSFER PAYMENTS TO PUBLIC ENTITIES
- No transfer payments were made to public entities.
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5.2. TRANSFER PAYMENTS TO ALL ORGANISATIONS OTHER THAN PUBLIC ENTITIES
Name Type of Purpose for which Did the Amount Amount Reasons for the of organi- the funds were NWPL. transferred spent by the funds unspent by the trans- sation used comply entity entity feree with s 35 (1) (a) (R’000) (R’000) of the FMPPLA ANC Political Political Party Yes R25 296 16.98 R24 069 430.00 R 1 227 085 Party Funding,Constitu- ency Allowance,Re- The underspending search Allowance, is as a result of and Secretarial implementing the Allowance revised members’ enabling facilities policy
EFF Political Political Party Yes R6 929 532.89 R 6 929 532.00 N/A Party Funding,Constitu- ency Allowance,Re- search Allowance, and Secretarial Allowance. DA Political Political Party Yes R4 597 827.67 R 4 687 828.00 R90 000 over spent Party Funding,Constitu- as a result of an ency Allowance,Re- erroneous additional search Allowance, transfer to one and Secretarial political party Allowance. – A Receivable was raised in 2019/2020 period after engagement with the political party.
- An acknowledgement of the erroneous transfer was received.
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Name Type of Purpose for which Did the Amount Amount Reasons for the of organi- the funds were NWPL. transferred spent by the funds unspent by the trans- sation used comply entity entity feree with s 35 (1) (a) (R’000) (R’000) of the FMPPLA VF+ Political Political Party Yes R2 891 122.46 R 2 891 124.00 N/A Party Funding,Constitu- ency Allowance,Re- search Allowance, and Secretarial Allowance.
6. CONDITIONAL GRANTS
6.1. CONDITIONAL GRANTS AND EARMARKED FUNDS PAID
- None
6.2. CONDITIONAL GRANTS AND EARMARKED FUNDS RECEIVED
- The NWPL did not receive any conditional grants.
- The Provincial Treasury appropriated an amount of R71 854 000 earmarked for Infrastructure projects.
7. DONOR FUNDS RECEIVED
An amount of R840 000 was received from PSETA as funding for the learnership programme.
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8. CAPITAL INVESTMENT
8.1. CAPITAL INVESTMENT, MAINTENANCE AND ASSET MANAGEMENT PLAN
2019/20 2018/19 Final Actual (Over) Final Actual (Over) un- Infrastructure Appropria- Expenditure under Appro- Expenditure der Expen- projects tion Expenditure priation diture
R’000 R’000 R’000 R’000 R’000 R’000 New and replace- - - - 165 879 162 979 2 900 ment assets Existing infrastruc- - - - 14 197 12 279 1 918 ture assets Upgrades and 7 000 - 7 000 - - - additions Rehabilitation, 64 854 32 634 32 220 10 055 9 662 393 renovations and refurbishments Maintenance and 6 792 5 993 799 4142 2 617 1 525 repairs Infrastructure - - - transfer Current 71 854 32 634 39 220 175 934 172 641 3 293 Capital 6 792 5 993 799 4 142 2 617 1 525 Total 78 646 38 627 40,019 180 076 175 258 4 818
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GOVERNANCE
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PRACTICE GOOD HYGIENE; STAY SAFE PART C: GOVERNANCE 2019/20 ANNUAL REPORT
1. RISK MANAGEMENT
1.1. RISK MANAGEMENT ACTIVITIES
The institution has appointed a Risk Management Committee (RMC) which comprises of four (4) members of management and two (2) external members. The committee is chaired by an external member and the committee reports to the Accounting Officer. For the period under review the committee, in performing its responsibility, recommended the below stated documents for the approval of the Accounting Officer:
- Risk Management Strategy and Implementation Plan;
- Risk Management Policy;
- Risk Management Committee Charter;
- Strategic Risk Assessment Report; and
- Fraud Risk Assessment Report
The committee is functional and held two (2) meetings during the year under review and fulfilled its responsibilities as outlined in the Committee’s charter.
The current status of the Oracle ERP remains a concern and the RMC continues to monitor the Oracle ERP Stabilization Project Plan as a means to remedy a risk event that has occurred.
The risk maturity level of the institution is an area of concern which is unmistakable shown by:
- Identification of risks; and
- Low or non-implementation of risk mitigation strategies by risk owners.
The following have been identified as the main barriers of risk management:
- The Risk Management division is inadequately resourced to address the risk management responsibilities;
- Inadequate commitment by management towards the risk management processes and governance; and
- Lack of integrated risk management tools or software.
The risk management function and institutional management have confidence in the progress made thus far in improving the institutional risk management culture.
The institution will gradually strive to improve its systems and processes to enhance sound corporate governance.
2. FRAUD AND CORRUPTION The institution has approved an Anti-fraud and Corruption Policy. The institution shall conduct fraud awareness and maintain the fraud risk register. Furthermore, an internal control function shall be established as a mitigation measure to curb the emergence of any possible act of fraud or corruption.
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3. MINIMISING CONFLICT OF INTEREST In our aim to strengthen governance within the Legislature, the Office of the Integrity Commissioner has been established to implement the Legislature’s Code of Conduct in terms of the Legislature’s Rules. The Code of Conduct ensures that Members of the Legislature are held accountable in terms of public responsibility in light of their personal interests, and also assists in identifying potential conflict of interests. The requirements for the disclosure of interests allows for transparency, so that Members’ conduct can be scrutinised in relation to their private business interest.
4. CODE OF CONDUCT In accordance with the institution’s Code of Conduct and Ethical Behaviour, all staff members are required to disclose their financial interests annually. This process was implemented to deter and prevent supply chain irregularities that could lead to collusion. The Legislature has employed an Integrity Commissioner on a contractual basis to process the Members of the Provincial Legislature’s financial interests. The Code of Conduct ensures that Members of the Legislature are held accountable in light of their personal interests, and also to assist in identifying potential conflict of interests. The requirements for the disclosure of interests allows for transparency, so that Members’ conduct can be scrutinised in relation to their private business interest. The appointment of the Office of the Integrity Commissioner has served to improve Members’ understanding of the ethical requirements and has also ensured that breaches of the Code were investigated. 5. HEALTH SAFETY AND ENVIRONMENTAL ISSUES For the year under review, there were no reported cases on health, safety and environmental issues.
6. PORTFOLIO COMMITTEE ON LEGISLATURE AFFAIRS The Standing Committee on the Oversight of the NWPL provides oversight over the NWPL and the table below reflects the number of meetings held with the Standing Committee during the 2019/20 financial year.
Table A: Meetings with the Standing Committee on the Oversight of the NWPL
Date of Meeting Purpose of the Meeting Outcome of the Meeting 1. 10th July 2019 Briefing: NWPL Annual Performance The Committee adopted the Plan 2019/2020. NWPL APP 2019/2020 Report with recommendations.
2. 28th August 2019 Briefing: NWPL 4th Quarter Performance The Committee adopted the 4th Information Report 2018/19 and NWPL 1st Quarter Performance Information Quarter Performance Reports 2019/20. and 1st Quarter Performance Report 2019/20.
3. 16th October 2019 Briefing: Final Draft NWPL Annual Report The Committee issued 2018/19. recommendations to the NWPL and these were addressed.
4. 30th October 2019 Briefing: NWPL Annual Report 2018/19. The Committee adopted the NWPL Annual Report 2018/19.
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Date of Meeting Purpose of the Meeting Outcome of the Meeting 5. 15th November 2020 Briefing: NWPL 2nd Quarter The Committee adopted the Performance Information Report NWPL 2nd Quarter Performance 2019/20. Information 2019/20.
6. 11th March 2020 Briefing: NWPL 3rd Quarter Performance The Committee issued Information Reports 2019/2020 , NWPL recommendations to the NWPL Annual Performance Plan 2020/21 and and these were addressed. NWPL Strategic Plan 2020/2025.
Table B: Resolutions issued by the Standing Committee on the Oversight of the NWPL
Resolution No. Resolutions Management Action Status
ICT
1. The NWPL Website and The NWPL Website must be Completed Legislature policies are outdated. updated on a continuous basis.
Governance
2. NWPL outdated policies on the The report on all Policies Completed Website submitted
Infrastructure Management
3. Infrastructure Report on Phase 1 Report on the infrastructure Completed of the Chamber Refurbishment project, refurbishment of the first project including a cost budget phase of the Chamber with a and completion date of the cost budget. project.
Committee was concerned about the delay of connection of data cables in the New building
Security of MPL’s 4. Detailed report on strengthening A detailed report was sent to the Completed of security in NWPL activities – Standing Committee. Security in public hearings and status of Lowe Parliamentary Village.
7. PRIOR MODIFICATIONS TO AUDIT REPORTS - Not Applicable
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8. INTERNAL CONTROL UNIT The Legislature does not have an Internal Control Unit.
9. INTERNAL AUDIT AND AUDIT COMMITTEE Internal Audit Activity (IAA) is a resourceful tool available to management and the Audit Committee. It assists the NWPL in accomplishing their objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of the organisation's control, risk management and governance processes.
The IAA implemented its annual risk-based audit plan for the 2019/20 financial year as part of the three-year rolling plan, after consultation with management and approval by the NWPL’s Audit Committee. Seventeen (17) Audits were planned for the 2019/20 financial year. Of the seventeen (17) planned audits, ten (10) were completed, six (6) were still in progress and rolled over to the 2020/21 financial year, and one (1) audit was cancelled due to the infeasible timing, at the end of the year.
Of the six (6) audits which were rolled over to 2020/21; three (3) were at a reporting stage and could not be finalized due to the COVID-19 pandemic crisis. All the changes to planned audits were approved by the Audit Committee. This resulted in a 59 percent completion of the approved 2019/20 internal audit annual plan.
The Audit Committee is established as a statutory committee in terms of Section 48 of the FMPPLA as amended. The committee performs an oversight and advisory role to the NWPL and is accountable to the Executive Authority and the public to properly consider and evaluate all matters as per its terms of reference.
The purpose of the committee is to assist the Executive Authority in fulfilling its oversight responsibilities and the Accounting Officer in fulfilling executive duties regarding the financial reporting process, the management of risk, the system of internal control, the audit process, and the Legislature’s process for monitoring compliance with laws, regulations and code of conduct.
The Committee also has a primary responsibility to the public to form an opinion on the effectiveness of those issues within its ambit, and communicates this in the annual report in terms of the NWPL.
10. AUDIT COMMITTEE REPORT
The North West Provincial Legislature Audit Committee (the Committee) is pleased to present its report for the year ended 31 March 2020. The report has been prepared in line with the requirements of the Financial Management of Parliament and Provincial Legislatures Act 2009 (Act No.10 of 2009), as amended (FMPPLA).
10.1. MEMBERSHIP AND ATTENDANCE
The Committee comprises of five (5) independent non-executive member who are appointed bythe Executive Authority. During the reporting period, the composition of the Committee was changed as reflected in the table below. In terms of the FMPLLA and the Committee charter, the Committee is required to meet at least four (4) times per annum. During the financial year, five (5) meetings were held. This included a special meeting to consider the financial statements and the report on non-financial performance information. Meeting attendance per member is also outlined in the table below:
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Name Qualifications Internal or Date Date No. of external appointed Resigned Meetings member attended with management Ms. J Brown B.Com External Appointed 01st Contract 5 out of 5 Member Nov 2017 ended 30 Nov 2019 Mr. T Mokgatle National Diploma External Appointed 01st Contract 5 out of 5 Public Admin Member Nov 2017 ended 30th Nov 2019 Ms. M Nkomo - B. Com External Initial Contract 5 out of 5 Member appointment ended 30th - BCom (Hon.) 01st Nov 2017 Oct 2019
- M.Com Re-appointed 01st Nov 2019 Mr. F. Docrat - MBA External 01st Jan 2018 N/A 5 out of 5 Member - CISM
- CISA
- CGEIT
- CRM-Prac IRMSA
- CD (SA) IoD Mr. M - B. Com External 01st Jan 2018 N/A 4 out of 5 Mokgobinyane Member - B.com (Hon) (Accounting)
- CA (SA)
Ms. P Mangoma - B. Compt (Acc) B. Compt (Acc) 01st Nov 2019 N/A 2 out of 2
-B. Com (Hon)- Internal Auditing
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Name Qualifications Internal or Date Date No. of external appointed Resigned Meetings member attended with management Mr. K Maja - B. Com (Acc) External 01st Nov 2019 N/A 1 out of 2 Member - B. Compt (Hons)
- Master of Business Leadership
- (MBL)
- CIA
10.2. AUDIT COMMITTEE RESPONSIBILITY
The Committee has complied with its responsibilities arising from Section 48 of FMPPLA. The Committee has also regulated its affairs in compliance with its Charter, and has discharged all its responsibilities as contained therein.
10.3. THE EFFECTIVENESS OF INTERNAL CONTROL
The Committee reviewed the reports of management, internal and external auditors on the design and implementation of the systems of control. Based on the assurance provided by management, internal auditors and the Auditor-General of South Africa (AGSA), no material breakdown in the system of internal control was reported.
Due to design deficiencies in the accounting system, management has utilised an alternative general ledger on the Pastel Accounting System for the preparation of the 2019/20 Annual Financial Statements as the integrity and completeness of the Oracle Accounting System was questionable.
The Accounting Officer has initiated an Oracle stabilisation project to ensure proper configuration of the system. Phase 1 of the project was completed during the 2019/20 financial year, and Phase 2 will continue into the 2020/21 financial year.
Although some measures are in place to ensure that the internal control environment is stabilised, the ongoing efforts to enhance internal control measures are commendable. Significant improvement of the internal controls around Information Technology (IT), Supply Chain Management and Human Resources Management are strongly encouraged. There is however a need to urgently implement and realise outcomes from the consequence management processes to prevent further deterioration of the internal control environment.
10.4. EFFECTIVENESS OF INTERNAL AUDIT
The NWPL has established an Internal Audit unit which is an independent function from management, as required in terms of section 50 of the FMPPLA. During the financial year, the Internal Audit unit operated in terms of the approved Internal Audit Charter, developed a risk based internal audit annual plan, and
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reported quarterly to the Committee against the plan.
Internal Audit has reviewed the system of internal controls, performance information and risk management during the period under review. Notwithstanding the ongoing capacity constraints within the unit, the Internal Audit Activity (IAA) operated effectively and addressed some of the pertinent risk areas in its audits.
However, some of the recommendations emanating from Internal Audit were not implemented by management, and in some instances, there were no management responses on the Internal Audit reports. The Committee has continuously urged management to implement the Internal Audit findings ot ensure an improved internal control environment.
The capacity constraints experienced by Internal Audit reduced the reliance the Audit Committee places on the IAA in terms of combined assurance. The Audit Committee’s concerns were highlighted and reported to the Hon. Speaker of the Legislature.
10.5. COMBINED ASSURANCE
The responsibility to oversee combined assurance was delegated to the Committee in terms of its Charter. A Combined Assurance Framework was approved during the period under review.
Combined assurance is still at infancy stage within the NWPL, and the Committee commits to work with management to improve this area towards a fully integrated and streamlined assurance provision across all lines of assurance.
10.6. PERFORMANCE INFORMATION
The Committee monitored implementation of the NWPL’s Annual Performance Plan (APP) in order to eventually achieve its strategic objectives and deliver on its mandate. The performance information was not always timeously submitted nor validated. This has resulted in management not timeously implementing some of Internal Audit’s and AGSA’s recommendations related to performance information.
The Committee is satisfied that the reports on performance information are a fair reflection of the operational status of the Legislature as set out in the Strategic Plan.
10.7. RISK MANAGEMENT
The NWPL Risk Management Committee (RMC) has an external independent Chairman. The RMC provided oversight on the development and implementation of the risk management policies, the risk assessment process, and the development of the strategic risk register. Management is ultimately responsible for maintaining an effective set of risk management processes.
The Committee has assessed the adequacy of the NWPL’s risk management processes, which are guided by a risk management framework. The Committee has met with the Chairman of the RMC, and noted progress made by management to implement the RMC’s recommendations.
Although the risk management processes within the NWPL have improved, significant effort to reach an
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acceptable level of maturity is still required. The Committee is partially satisfied with the effectiveness fo the risk management posture. The Committee recommended that certain interventions be implemented to improve the NWPL risk maturity level. Management was advised to specifically improve capacity within the Risk Management unit.
10.8. IN-YEAR MANAGEMENT AND QUARTERLY REPORT
The NWPL has submitted, in terms of sections 51 to 53 of the FMPPLA, quarterly and mid-term reports to the Executive Authority. Although the integrity of the accounting system was questionable, mitigating processes were implemented to ensure that the periodic financial reports were of an acceptable quality, and compliant with the accounting standards.
The Committee is satisfied with the content and quality of quarterly and in-year management reports issued during the year under review.
10.9. EVALUATION OF THE FINANCIAL STATEMENTS
The Committee has reviewed and discussed the following:
• Audited Annual Financial Statements for the year ended 31 March 2020 to be included in the annual report, with the AGSA and the NWPL Management;
• Information of the audited pre-determined objectives to be included in the 2019/20 annual report;
• Changes in accounting policies and practices; and
• NWPL’s compliance with legal and regulatory provisions.
The Committee concurs with and accepts the conclusion of the AGSA report on the Annual Financial Statements and is of the opinion that the Annual Financial Statements be accepted and read together with the report of the AGSA.
10.10. AUDITOR-GENERAL SOUTH AFRICA
The Committee liaised with the AGSA during the period under review. We have reviewed the Legislature’s implementation plan for audit findings raised in the previous year and we are satisfied that the matters have been, to a fair extent, adequately resolved.
10.11. COMPLIANCE
The Committee has reviewed the Legislature’s compliance universe and checklist that were developed by management.
Implementation of the planned activities will ensure that the NWPL reaches its target of timeously complying with all the requisite statutory and regulatory requirements.
10.12. CONCLUSION
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The Committee would like to thank the Executive Authority, the Secretary to the NWPL and management for their support throughout the year. The Committee is confident that through the guidance it provides, and the cooperation by management, internal controls and good governance practices would be enhanced.
The Committee wishes to express appreciation to the previous Audit Committee members for laying a good foundation upon which our oversight role would be enhanced.
Special appreciation also goes to the AGSA and the Internal Audit team for their support and professionalism in the performance of their mandates.
…………………………………………
Ms. M. Nkomo
Chairperson: Audit Committee
Date: 31 August 2020
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HUMAN RESOURCE MANAGEMENT
COVID-19
PRACTICE GOOD HYGIENE; STAY SAFE PART D: HUMAN RESOURCE MANAGEMENT 2019/20 ANNUAL REPORT
1. INTRODUCTION
The Legislature houses 213 staff members and 22 Members of the Legislature. This section of the report relates to all areas within Human Resources. This includes, but is not limited to sick leave, annual performance bonuses and employment equity but to name a few.
2. HUMAN RESOURCE OVERSIGHT STATISTICS 2.1 PERSONNEL RELATED EXPENDITURE
The following tables summarises the final personnel related expenditure by programme and by salary bands. In particular, it provides an indication of the following:
- Amount spent on personnel; and
- Amount spent on salaries, overtime, homeowner’s allowances and medical aid.
Table 2.1.1 Personnel expenditure by programme for the period 01 April 2019 - 31 March 2020
Total Personnel Training Professional Personnel Average Expendi- Expenditure Expenditure and Special Expenditure as personnel ture Services a % of total cost per Expenditure expenditure employee
(R’000) (R’000) (R’000) (R’000) (%) (R’000) Staff 175 992 175 992 - - 84% 826.25
Members 33 961 33 961 - - 16% 1 543.68 (MPLs)
TOTAL 209 953 209 953 - - 100% 893.42
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Table 2.1.2 Personnel costs by salary band for the period 1 April 2019 and 31 Mar 2020
Salary band Personnel % of total personnel No. of Average expenditure cost employees personnel cost per employee (R’000) (R’000) Skilled (level 3-5) 8 764 5% 24 365.17 Highly skilled 57 967 33% 94 616.67 production (levels 6-8) Highly skilled 70 969 40% 72 985.68 supervision (levels 9-12) Senior and Top 38 292 22% 23 1 664.87 management (levels 13-16) TOTAL 175 992 100% 213 826.21
The above table does not include the 22 MPLs.
Table 2.1.3 Salaries, Overtime, Home Owners Allowance and Medical Aid by programme for the period 1 April 2019 and 31 March 2020
Pro- Salaries Overtime Home Owners Medical Aid gramme Allowance
Amount Salaries Amount Overtime Amount HOA as a % Amount Medical as a % of as a % of of person- aid as a personnel personnel nel costs % of costs costs person- nel costs
(R’000) (%) (R’000) (%) (R’000) (%) (R’000) (%) Staff 162 822 78% 196 - 7 412 4% 5 562 3% Members 32 283 15% - -- - 1 678 1% (MPLs) Total 195 105 93% 196 - 7 412 4% 7 240 3%
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Table 2.1.4 Salaries, Overtime, Home Owners Allowance and Medical Aid by salary band for the period 1 April 2019 and 31 Mar 2020
Salary band Salaries Overtime Home Owners Medical Aid Allowance
Amount Salaries as a Amount Over- Amount HOA as a % Amount Medical % of time as of person- aid as a personnel a % of nel costs % of costs per- personnel sonnel costs
(R’000) (%) (R’000) (%) (R’000) (%) (R’000) (%) Skilled 7 557 4% 101 - 838 0.48% 268 0.15% (level 3-5)
Highly skilled 52 088 27% 95 - 3 789 2.15% 1 995 1.13% production (levels 6-8) Highly skilled 66 151 34% - - 2 627 1.49% 2 191 1.24% supervision (levels 9-12 Senior 37 026 19% - - 158 0.09% 1 108 0.63% management (level 13-16) Total 16 221 92% 196 - 7 412 4.21% 5 562 3.16% The above table does not include the 22 MPLs
2.2. EMPLOYMENT AND VACANCIES
The tables in this section summarise the position with regard to employment and vacancies.
The following tables summarise the number of posts on the establishment, the number of employees, the vacancy rate, and whether there are any staff that are additional to the establishment.
This information is presented in terms of three key variables:
- Programme;
- Salary band; and
- Critical occupations.
The vacancy rate reflects the percentage of posts that are not filled.
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Table 2.2.1 Employment and vacancies by programme as at 31 March 2020
Programme Number of posts Number Vacancy Number of on approved of posts Rate employees establishment filled additional (%) to the establishment 1 Administration 265 140 47% - 2 Legislature Operations 84 73 13% - Total 349 213 38% - The above table does not include the 22 MPLs.
NB: All vacancies were abolished as a result of the new Organisational Structure which had a bearing on all vacancies. Some posts functions have been collapsed into one and other the responsibilities have changed, hence they could not be recognised as vacancies.
Table 2.2.2 Employment and vacancies by salary band as at 31 March 2020
Salary band Number of Number Vacancy Number of posts on of posts Rate employees approved filled additional establishment (%) to the establishment Lower skilled ( 1-2) - - - - Skilled (3-5) 54 40 26% - Highly skilled production (6-8) 205 108 47% - Highly skilled supervision (9-12) 58 42 27% - Senior management (13-16) 32 23 28% - Total 349 213 38% - The above table does not include the 22 MPLs.
Table 2.2.3 Employment and vacancies by critical occupations as on 31 March 2020
Not applicable
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2.3. FILLING OF SMS POSTS
Table 2.3.1 SMS post information as at 31 March 2020
SMS Level Total Total % of SMS Total % of SMS number number posts number of posts of funded of SMS filled SMS vacant SMS posts posts posts filled (%) vacant (%)
Director-General/ Head of Department - - - - - Salary Level 16 1 1 100% - - Salary Level 15 2 1 50% 1 50% Salary Level 14 7 4 57% 3 43% Salary Level 13 22 17 77% 5 22% Total 32 23 72% 9 28% The above table does not include the 22 MPLs.
Table 2.3.2 SMS post information as at 31 March 2020
SMS Level Total Total % of SMS Total % of SMS number number posts number posts of of filled of vacant funded SMS SMS SMS posts posts posts filled vacant Director-General/ Head of Department - - -- - Salary Level 16 1 1 100% - - Salary Level 15 2 1 50% 1 50% Salary Level 14 7 4 57% 3 43% Salary Level 13 22 17 77% 5 23% Total 32 23 72% 9 28% The above table does not include the 22 MPLs.
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Table 2.3.3 Advertising and filling of SMS posts for the period 1 April 2019 and 30 March 2020
SMS Level Number of Number of Number of vacancies vacancies per vacancies per per level level filled in level advertising 6 months filled in 6 months in 6 months becoming but filled vacant in 12 months Director-General/ Head of Department - - - Salary Level 16 - - - Salary Level 15 - - - Salary Level 14 1 1 - Salary Level 13 1 1 - Total 2 2 2 The above table does not include the 22 MPLs.
Table 2.3.4 Reasons for not having complied with the filling of funded vacant SMS - Advertised within 6 months and filled within 12 months after becoming vacant for the period 1 April 2019 and 31 March 2020
Reasons for vacancies not advertised within six months The Institution has undergone the review of the Organisational Structure and this has affected filling of posts. Also, the post grading system has changed for some posts and same still had to be approved.
Reasons for vacancies not filled within six months The Institution has undergone the review of the Organisational Structure and this has affected filling of posts. Also, the post grading system has changed for some posts and same still had to be approved.
Table 2.3.5 Disciplinary steps taken for not complying with the prescribed timeframes for filling SMS posts within 12 months for the period 1 October to December 2018
Reasons for vacancies not advertised within six months Disciplinary actions were not taken as the reasons provided for not filling the vacant positions posts were justified.
Reasons for vacancies not advertised within six months Disciplinary actions were not taken as the reasons provided for not filling the vacant positions posts were justified.
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2.4. JOB EVALUATION
Table 2.4.1 Job Evaluation by Salary band for the period 1 April 2019 and 31 March 2020
# There was no Job Evaluation conducted for the year under review.
The following table provides a summary of the number of employees whose positions were upgraded due to their post being upgraded. The number of employees might differ from the number of posts upgraded since not all employees are automatically absorbed into the new posts and some of the posts upgraded could also be vacant.
Table 2.4.2 Profile of employees whose positions were upgraded due to their posts being upgraded for the period 1 April 2019 and 31 March 2020
There was no Job Evaluation conducted for the year under review.
The following table summarises the number of cases where remuneration bands exceeded the grade determined by job evaluation. Reasons for the deviation are provided in each case.
Table 2.4.3 Employees with salary levels higher than those determined by job evaluation by occupation for the period 1 April 2019 and 31 March 2020
There was no Job Evaluation conducted for the year under review.
The following table summarises the beneficiaries of the above in terms of race, gender, and disability.
Table 2.4.4 Profile of employees who have salary levels higher than those determined by job evaluation for the period 1 April 2019 and 31 March 2020
There was no Job Evaluation conducted for the year under review.
2.5. EMPLOYMENT CHANGES
Turnover rates provide an indication of trends in the employment profile of the institution. The following tables provide a summary of turnover rates by salary band and critical occupations.
Table 2.5.1 Annual turnover rates by salary band
Salary band Number of Appointments Terminations Turnover employees and transfers in and rate at beginning transfers out of period -1 April 2019
Lower skilled (L1-2) - - - - Skilled (L3-5) 35 10 - -
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Salary band Number of Appointments Terminations Turnover employees and transfers in and rate at beginning transfers out of period -1 April 2019
Highly skilled production (L6-8) 108 - 02 1,8% Highly skilled supervision (L9-12) 39 - - - Senior Management Service Bands A 17 1 02 12% Senior Management Service Bands B - - - - Senior Management Service Bands C - - - - Senior Management Service Bands D - - - - Contracts 14 10 11 78% Total 213 21 15 7%
Calculation of Turnover Rate:
Number of terminations + Transfers out of the Department, divided by the total number of employees at the start of the period (01 April 2019)
Table 2.5.2 Annual turnover rates by critical occupation for the period 1 April 2019 and 31 March 2020
Critical occupation Number of Appointments Termina- Turnover employees at and tions and rate beginning of transfers transfers out period- into the of the April 2019 department department
Administrative related 93 20 14 15% Financial and related professionals 35 - - - Human resources & organ develop & relate prof 11 01 01 9% Other administrative policy and related officers 74 - - - TOTAL 213 21 15 7%
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Table 2.5.3 Reasons why staff left the institution: No. of terminations for this period
Reasons Number % of Total Resignations Death 2 13% Resignation 3 20% Expiry of contract 7 47% Dismissal – operational changes - - Dismissal – misconduct - - Dismissal – inefficiency - - Discharged due to ill-health 1 7% Retirement 2 13% Transfer to other Public Service Departments - - Other - - Total 15 100% Total number of employees who left as a % of total employment 7%
The above table does not include the 22 MPLs.
Table 2.5.4 Promotions by critical occupation
- Not applicable.
Table 2.5.5 Promotions by salary band
- Not applicable.
2.6. EMPLOYMENT EQUITY
Table 2.6.1 Total number of employees (including employees with disabilities) in each of the following occupational categories as at 31 March 2020
Occupational Male Female Total category African Coloured Indian White African Coloured Indian White
Legislators, senior officials 14 - - - 9 --- 23 and managers Professionals 13 - 1 14 2 1 - 31 Technicians and 14 - 1 - 23 1 - 2 41 associate professionals Clerks 27 --- 54 --- 81 Service and sales workers ------
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Occupational Male Female Total category African Coloured Indian White African Coloured Indian White
Skilled agriculture and ------fishery workers Craft and related trades ------workers Plant and machine ------operators and assemblers Elementary occupations 20 --- 17 --- 37
Total 88 - 1 1 117 3 1 2 213 Employees with 1 1 disabilities
# Legislators are not employees but elected Members of the Legislature
The above table does not include the 22 MPLs.
Table 2.6.2 Total number of employees (including employees with disabilities) in each of the following occupational bands on 31 March 2020
Occupational Male Female Total Band African Coloured Indian White African Coloured Indian White
Top Management 4 - - - 2 - - - 6 (L14-L16) Senior Management 10 - - - 7 - - - 17 (L13) Professionally qualified 13 - - 1 24 3 1 - 42 and experienced specialists and mid-management (L9 -12) Skilled technical 38 - 1 - 66 1 - 2 108 and academically qualified workers, junior management, supervisors, foreman and superintendents (L6 – 8)
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Occupational Male Female Total Band African Coloured Indian White African Coloured Indian White
Semi-skilled and 23 - - - 17 - - - 40 discretionary decision making (L3 -5) Total 88 - 1 1 116 4 1 2 213 The above table does not include the 22 MPLs
Table 2.6.3 Recruitment
Occupational Male Female Total Band African Coloured Indian White African Coloured Indian White Top Management 1 ------1 (L14-L16) Senior Management - --- 1 - - - 1 (L13) Professionally qualified - --- 2 - - - 2 and experienced specialists and mid-management (L9 -12) Skilled technical 1 ------1 and academically qualified workers, junior management, supervisors, foreman and superintendents (L6 – 8) Semi-skilled and 2 - 2 4 discretionary decision making (L3 -5) Unskilled and defined ------decision making (L1-2) Total 4 3 2 9 Employees with ------disabilities The above table does not include the 22 MPLs.
Table 2.6.4 Promotions
- Not applicable
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Table 2.6.5 Terminations
Occupational Male Female Total Band African Coloured Indian White African Coloured Indian White Top Management 1 - - - 2 - - - 3 (L14-L16) Senior Management 2 ------2 (L13) Professionally qualified 4 - - - 1 - - - 5 and experienced specialists and mid-management (L9 -12) Skilled technical 2 - - - 1 - - - 3 and academically qualified workers, junior management, supervisors, foreman and superintendents (L6 – 8) Semi-skilled and 1 - - - 1 - - - 2 discretionary decision making (L3 -5) Unskilled and defined ------decision making (L1-2) Total 10 - - - 5 - - - 15 Employees with ------disabilities
The above table does not include the 22 Members of the Legislature (MPLs).
Table 2.6.6 Disciplinary action
Disciplinary Male Female Total action African Coloured Indian White African Coloured Indian White Disciplinary Action ------Taken
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2.7. SIGNING OF PERFORMANCE AGREEMENTS BY SMS
Table 2.7.1 Signing of Performance Agreements by SMS members as on 31 May 2019
SMS Level Total Total Total Signed number number number performance of funded of of signed agreements SMS posts SMS performance as % of total members agreements number of SMS members Director-General/ Head of - - - - Department Salary Level 16 1 1 - - Salary Level 15 2 2 - - Salary Level 14 7 5 - 0 Salary Level 13 16 15 - 0 Total 26 23 - 0% The above table does not include the 22 Members of the Legislature (MPLs).
Table 2.7.2. Reasons for not having concluded the Performance Agreements
- Not provided.
Table 2.7.3 Disciplinary steps taken against SMS members for not having concluded Performance agreements as on 31 May 2019
- None
2.8 PERFORMANCE REWARDS
Table 2.8.1 Performance Rewards by race, gender and disability for the period 1 April 2019 to 31 March 2020
Race and Gender Beneficiary Profile Cost Number of Number of % of total Cost Average beneficiaries employees within cost per group employee
African Male 64 88 73% 2 090 32.65 Female 84 114 72% 2 386 28.40 Coloured Male - -
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Race and Gender Beneficiary Profile Cost Number of Number of % of total Cost Average beneficiaries employees within cost per group employee
Female 5 5 100% 211 42.20 Indian Male - 1 100% - - Female - - - - - White Male - 1 - - - Female 1 2 50% 27 27 Total 154 213 72% 4 714 30.61
Table 2.8.2 Performance Rewards by salary band for personnel below Senior Management Service for the period 1 April 2019 to 31 March 2020
Salary band Beneficiary Profile Cost
Number of Number of % of total Total Average Total cost as beneficiaries employees within Cost cost a % of the to- salary per tal personnel bands employee expenditure
Skilled (L3-5) 9 24 38% 88 10 0.05 Highly skilled 82 94 87% 1 695 21 0.96 production (L6-8) Highly skilled 54 72 74% 2 210 41 1.26 supervision (L-12) Total 145 190 76% 3 993 28 2.27
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Table 2.8.4 Performance related rewards (cash bonus), by salary band for Senior Management Service for the period 1 Apr 2019 to 31 March 2020
Salary band Beneficiary Profile Cost
Number of Number of % of total Total Average Total cost as beneficiaries employees within Cost cost a % of the to- salary per tal personnel bands employee expenditure
Manager (L13) 7 17 41% 481 69 0.27 Executive (L14) 1 4 25% 69 69 0.04 Deputy Secretary (L15) - 1 -- - - Secretary (L16) 1 1 100% 171 171 0.09 Total 9 23 39% 721 90.60 0.41
The above table does not include the 22 Members of the Legislature (MPLs).
2.9. FOREIGN WORKERS
The Legislature does not have any foreign workers.
2.10. LEAVE UTILISATION
The following tables provide an indication of the use of sick leave and disability leave. In both cases, the estimated cost of the leave is also provided.
Table 2.10.1 Sick leave
Salary Band Total % Days Number of % of Average Estimated days with Employees total days per Cost (R’000) Medical using employees employee certifica- sick leave using tion sick leave
Lower Skills (L1-2) ------Skilled (L3-5) 98 16% 24 11% 4 58 Highly skilled 275 31% 94 44% 4 227 production (L6-8)
Highly skilled 252 28% 72 33% 3 486 supervision (L9 -12)
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Salary Band Total % Days Number of % of Average Estimated days with Employees total days per Cost (R’000) Medical using employees employee certifica- sick leave using tion sick leave
Top and Senior 102 22% 23 11% 5 214 management (levels 13-16) Total 727 13% 213 32% 5 985
Table 2.10.2. Annual Leave
Salary Band Total Number of Average per days Employees employee taken using annual leave Lower Skills (L1-2) - - - Skilled (L3-5) 190 24 8 Highly skilled production (L6-8) 1202 94 13 Highly skilled supervision (L9 -12) 997 72 14 Senior management(levels 13-16) 298 23 13
Total 2687 213 13 The above table does not include the 22 Members of the Legislature (MPLs).
Table 2.10.3 Capped leave
- None
Table 2.10.4 Leave payouts
As per the Legislature Leave Policy, leave days not utilised are forfeited, hence no leave payouts.
2.11. HIV/AIDS & HEALTH PROMOTION PROGRAMMES
Table 2.11.1 Steps taken to reduce the risk of occupational exposure
Units/categories of employees identified to be at high risk of Key steps taken to reduce the risk contracting HIV & related diseases (if any)
N/A N/A
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Table 2.11.2 Details of Health Promotion and HIV/AIDS Programmes
Question Yes No Details, if yes 1. Has the institution designated a member of the SMS x M.S Tselapedi to implement the provisions contained in Part VI E of HR Manager Chapter 1 of the Public Service Regulations, 2001? If so, provide her/his name and position.
2. Does the institution have a dedicated unit or has it des- x All positions are still to be ignate specific staff members to promote the health advertised, therefore all and well-being of your employees? If so, indicate the matters relating to health and number of employees who are involved in this task and well- the annual budget that is available for this purpose. being of your employees is dealt with from the Office of the HRM Manager 3. Has the institution introduced an Employee Assistance x or Health Promotion Programme for your employ- ees? If so, indicate the key elements/services of this Programme.
4. Has the institution established (a) committee(s) x as contemplated in Part VI E.5 (e) of Chapter 1 of the Public Service Regulations, 2001? If so, please provide the names of the members of the committee and the stakeholder(s) that they represent.
5. Has the institution reviewed its employment policies x and practices to ensure that these do not unfairly dis- criminate against employees on the basis of their HIV status? If so, list the employment policies/practices so reviewed
6. Has the institution introduced measures to protect x HIV-positive employees or those perceived to be HIV-positive from discrimination? If so, list the key ele- ments of these measures. 7. Does the institution encourage its employees to under- x go Voluntary Counselling and Testing? If so, list the re- sults that you have you achieved. 8. Has the institution developed measures/indica- x tors to monitor & evaluate the impact of its health promotion programme? If so, list these measures/ indicators.
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2.12. LABOUR RELATIONS
Table 3.12.1 Collective agreements
Subject Matter Date Agreement on issues of mutual interests 01 April 2019 to 31 March 2020
The following table summarises the outcome of disciplinary hearings conducted within the institution for the year under review.
Table 2.12.2 Misconduct and disciplinary hearings finalised
Outcomes of disciplinary hearings Number % of total Correctional counselling - - Verbal warning - - Written warning 1 100% Final written warning - - Suspended without pay - - Fine - - Demotion - - Dismissal - - Not guilty - - Case withdrawn - - Total 1 100%
Table 2.12.3 Types of misconduct addressed at disciplinary hearings
Type of misconduct Number % of total Absenteeism - - Total - -
Table 2.12.4 Grievances logged
Number % of Total Number of grievances resolved - - Number of grievances not resolved - - Total number of grievances lodged - -
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Table 2.12.5 Disputes logged
Disputes Number % of Total Number of disputes upheld 2 100% Number of disputes dismissed - - Total number of disputes lodged 2 100%
Table 2.12.6 Strike actions
- None
Table 2.12.7 Precautionary suspensions
Number of people suspended - Number of people whose suspension exceeded 30 days - Average number of days suspended - Cost of suspension (R’000) -
2.13. SKILLS DEVELOPMENT
This section highlights the efforts of the Legislature with regard to skills development.
Table 2.13.1 Training needs identified for the period 01 April 2019 – 31 March 2020
Occupational Gender Number of Training needs identified at start of the reporting employees as period Category at 31 March Learner- Skills Other forms Total 2020 ships Programmes of training & other short courses Legislators, senior Female 09 - 1 1 2 officials and Male 14 - - -- managers Professionals Female 17 - 04 03 07 Male 14 - 06 02 08 Technicians Female 26 - 06 - 06 and associate Male 15 - 05 - 05 professionals
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Occupational Gender Number of Training needs identified at start of the reporting employees as period Category at 31 March Learner- Skills Other forms Total 2020 ships Programmes of training & other short courses Clerks Female 54 - - -- Male 27 - - -- Service and sales Female - - - -- workers Male - - - -- Skilled agriculture Female - - - -- and fishery workers Male - - - -- Craft and related Female - - - -- trades workers Male - - - -- Plant and machine Female - - - -- operators and Male - - - -- assemblers Elementary Female 17 - - -- occupations Male 20 - - --
Sub Total Female 123 - 11 4 15 Male 90 - 11 2 13 Total 213 - 22 6 28
Table 2.13.2 Training provided for the period 01 April 2019 – 31 March 2020
Occupational Category Gender Number Training provided within the reporting period employees Learnerships Skills Other Total as at Programmes forms of 31 March & other short training 2019 courses
Legislators, senior offi- Female 9 - 1 - 1 cials and managers Male 14 - 2 - 2 Professionals Female 17 - 2 - 2 Male 14 - 2 - 2 Technicians and associ- Female 26 - 12 - 12 ate professionals Male 15 - 8 - 8
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Occupational Category Gender Number Training provided within the reporting period employees Learnerships Skills Other Total as at Programmes forms of 31 March & other short training 2019 courses
Clerks Female 54 - 15 - 15 Male 27 - 5 - 5 Service and sales workers Female - - - -- Male - - - -- Skilled agriculture and Female - - - -- fishery workers Male - - - -- Craft and related trades Female - - - -- workers Male - - - -- Plant and machine Female - - - -- operators and assem- Male - - - -- blers Elementary occupations Female 17 - - -- Male 20 - - -- Sub Total Female 123 30 30 Male 90 17 17 Total 213 47 47
The above table does not include the 22 MPLs.
2.14. INJURY ON DUTY
Injury on duty occurred Number Four Status Months
Yes 2 Submitted to Dept. ofLabour
Tables 2.15.1 – 2.15.4 Utilisation of consultants
- For 2019/20, no Consultants in HR
Table 2.16. Severance packages
- No severance package for the year under review
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FINANCIAL INFORMATION
COVID-19
PRACTICE GOOD HYGIENE; STAY SAFE
Report of the auditor-general to the North West provincial legislature on vote no. 2: Provincial Legislature
Report on the audit of the financial statements
Opinion
1. I have audited the financial statements of the Provincial Legislature set out on pages 91 - 141, which comprise the statement of financial position as at 31 March 2020, and the statement of financial performance, statement of changes in net assets, the cash flow statement and the statement of comparison of budget and actual amounts for the year then ended, as well as the notes to the financial statements, including a summary of significant accounting policies. 2. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Provincial Legislature as at 31 March 2020, and its financial performance and cash flows for the year then ended in accordance with the Standards of Generally Recognised Accounting Practice (Standards of GRAP) and the requirements of the Financial Management of Parliament and Provincial Legislatures Act of South Africa, 2009 (Act No. 10 of 2009) (FMPPLA).
Basis for opinion
3. I conducted my audit in accordance with the International Standards on Auditing (ISAs). My responsibilities under those standards are further described in the auditor-general’s responsibilities for the audit of the financial statements section of this auditor’s report. 4. I am independent of the legislature in accordance with sections 290 and 291 of the Code of ethics for professional accountants and parts 1 and 3 of the International Code of Ethics for Professional Accountants (including International Independence Standards) of the International Ethics Standards Board for Accountants (IESBA codes) as well as the ethical requirements that are relevant to my audit in South Africa. I have fulfilled my other ethical responsibilities in accordance with these requirements and the IESBA codes. 5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.
Emphasis of matters
6. I draw attention to the matters below. My opinion is not modified in respect of these matters.
Irregular and fruitless and wasteful expenditure 7. As disclosed in note 32 to the financial statements, irregular expenditure of R40 688 397 was incurred in the current year and irregular expenditure of R307 307 497 from prior years had not been resolved.
8. As disclosed in note 31 to the financial statements, fruitless and wasteful expenditure of R471 436 was incurred in the current year and fruitless and wasteful expenditure of R691 905 from prior years had not been resolved. Responsibilities of the accounting officer for the financial statements
9. The accounting officer is responsible for the preparation and fair presentation of the financial statements in accordance with the Standards of GRAP and the requirements of the FMPPLA and for such internal control as the accounting officer determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. 10. In preparing the financial statements, the accounting officer is responsible for assessing the Provincial Legislature’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the appropriate governance structure either intends to liquidate the legislature or to cease operations, or there is no realistic alternative but to do so.
Auditor-general’s responsibilities for the audit of the financial statements
11. My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 12. A further description of my responsibilities for the audit of the financial statements is included in the annexure to this auditor’s report.
Report on the audit of the annual performance report
Introduction and scope
13. In accordance with the Public Audit Act of South Africa, 2004 (Act No. 25 of 2004) (PAA) and the general notice issued in terms thereof, I have a responsibility to report on the usefulness and reliability of the reported performance information against predetermined objectives for selected programme presented in the annual performance report. I performed procedures to identify findings but not to gather evidence to express assurance. 14. My procedures address the usefulness and reliability of the reported performance information, which must be based on the approved performance planning documents of the legislature. I have not evaluated the completeness and appropriateness of the performance indicators included in the planning documents. My procedures do not examine whether the actions taken by the legislature enabled service delivery. My procedures also did not extend to any disclosures or assertions relating to planned performance strategies and information in respect of future periods that may be included as part of the reported performance information. Accordingly, my findings do not extend to these matters. 15. I evaluated the usefulness and reliability of the reported performance information in accordance with the criteria developed from the performance management and reporting framework, as defined in the general notice, for the following selected programme presented in the annual performance report of the legislature for the year ended 31 March 2020: Programmes Pages in the annual performance report
Programme 3 - Legislature operations 42 - 47
16. I performed procedures to determine whether the reported performance information was properly presented and whether performance was consistent with the approved performance planning documents. I performed further procedures to assess the reliability of the reported performance information to determine whether it was valid, accurate and complete. 17. I did not identify any material findings on the usefulness and reliability of the reported performance information on the selected programme of the legislature.
Other matter
18. I draw attention to the matter below.
Adjustment of material misstatements 19. I identified material misstatements in the annual performance report submitted for auditing. These material misstatements were on the reported performance information of Legislature operations. As management subsequently corrected the misstatements, I did not report any material findings on the usefulness and reliability of the reported performance information.
Report on audit of compliance with legislation
Introduction and scope
20. In accordance with the PAA and the general notice issued in terms thereof, I have a responsibility to report material findings on the compliance of the legislature with specific matters in key legislation. I performed procedures to identify findings but not to gather evidence to express assurance. 21. The material findings on compliance with specific matters in key legislation are as follows:
Expenditure management 22. Appropriate steps were not taken to prevent irregular expenditure of R40 688 397 as disclosed in note 32 to the financial statements, as required by section 7(e) of the FMPPLA. The majority of the irregular expenditure was caused by non-compliance with the competitive bidding requirements of Parliament SCM regulation 6 that occurred in the prior years. 23. Appropriate steps were not taken to prevent fruitless and wasteful expenditure of R471 436, as disclosed in note 31 to the financial statements, as required by section 7(e) of the FMPPLA. The majority of the fruitless and wasteful expenditure was caused by interest charged on late payment of suppliers and traffic fines received when using rental motor vehicles. 24. Payments were not made within 30 days after receipt of invoices or statements, as required by section 33(2)(e) of the FMPPLA.
Procurement and contract management 25. Some of the contracts were extended or modified without the approval of a properly delegated official, in contravention of Parliament’s SCM regulation 11(2) and (3). 26. Awards were made to service providers whose directors were in the service of other state institutions, in contravention of Parliament’s SCM regulation 8(2).
Other information
27. The accounting officer is responsible for the other information. The other information comprises the information included in the annual report. The other information does not include the financial statements, the auditor’s report thereon and those selected programme presented in the annual performance report that have been specifically reported on in this auditor’s report.
28. My opinion on the financial statements and findings on the reported performance information and compliance with legislation do not cover the other information and I do not express an audit opinion or any form of assurance conclusion thereon. 29. In connection with my audit, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements and the selected programme presented in the annual performance report, or my knowledge obtained in the audit, or otherwise appears to be materially misstated. 30. If, based on the work I have performed, I conclude that there is a material misstatement in this other information, I am required to report that fact. I have nothing to report in this regard.
Internal control deficiencies
31. I considered internal control relevant to my audit of the financial statements, reported performance information and compliance with applicable legislation; however, my objective was not to express any form of assurance thereon. The matters reported below are limited to the significant internal control deficiencies that resulted in the findings on compliance with legislation included in this report. • The accounting officer did not adequately exercise appropriate oversight over compliance with laws and regulations and related internal controls. In addition, the implementation and monitoring of action plans to address internal control deficiencies has not resulted in an improved internal control environment. Information technology governance was not enforced through appropriate policies and service level agreements. • Non-compliance with laws and regulations could have been prevented had compliance been properly reviewed and monitored. The information technology system environment was not adequately designed and monitored to ensure accurate processing and reporting of information. • The risks identified during the risk assessment process relating to compliance with laws and regulations and information technology were not adequately monitored by management. Although the audit committee fulfilled their functions, they had limited impact due to the lack of adequate implementation of their recommendations by the legislature. This resulted in an inadequate control environment over compliance with laws and regulations and information technology
Rustenburg
31 August 2020
Annexure – Auditor-general’s responsibility for the audit 1. As part of an audit in accordance with the ISAs, I exercise professional judgement and maintain professional scepticism throughout my audit of the financial statements, and the procedures performed on reported performance information for selected programme and on the legislature’s compliance with respect to the selected subject matters.
Financial statements
2. In addition to my responsibility for the audit of the financial statements as described in the auditor’s report, I also: • identify and assess the risks of material misstatement of the financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the legislature’s internal control. • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the accounting officer. • conclude on the appropriateness of the accounting officer’s use of the going concern basis of accounting in the preparation of the financial statements. I also conclude, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Provincial Legislature’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements about the material uncertainty or, if such disclosures are inadequate, to modify the opinion on the financial statements. My conclusions are based on the information available to me at the date of the auditor’s report. However, future events or conditions may cause a legislature to cease to continue as a going concern. • evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Communication with those charged with governance
3. I communicate with the accounting officer regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. 4. I also confirm to the accounting officer that I have complied with relevant ethical requirements regarding independence, and communicate all relationships and other matters that may reasonably be thought to have a bearing on my independence and where applicable, related safeguards.
NORTH WEST PROVINCIAL LEGISLATURE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020 North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT General Information
Country of incorporation and domicile South Africa Nature of the operations North West Provincial Legislature’s (NWPL) vision is to build an united, non-racial, non-sexist, democratic and prosperous society in the North West province.
The North West Provincial Legislature aims to provide services to the people of North West province by ensuring:
• A vibrant Legislature that is responsive to and addresses the challenges of development facing our people;
• An accountable executive by strengthening oversight on the promises made to our people by government;
• Promotion of efficient and healthy co-operative governance between the three spheres of government; and
• A creative, effective, efficient and transformative administration that helps the Members of the Legislature to fulfil their constitutional mandate. Business address Dr James Moroka Drive New Parliament Building Mmabatho 2735
Postal address Private Bag X2018 Mmabatho 2735
Bankers ABSA Bank Limited
Auditors Auditor General of South Africa
Secretary Mr O.S. Mosiane
Jurisdiction North West Province
Governing Legislation Financial Management of Parliament and Provincial Legislature Act, 2009 (Act No. 10 of 2009)
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The reports and statements set out below comprise the financial statements presented by the provincial legislature:
Page
Accounting Officer’s Responsibilities and Approval 93
Accounting Officer’s Report 94 - 95
Statement of Financial Position 96
Statement of Financial Performance 97
Statement of Changes in Net Assets 98
Statement of Cash Flows 99
Statement of Comparison of Budget and Actual Amounts 100
Accounting Policies 101 - 114
Notes to the Financial Statements 115 - 141
GRAP Generally Recognised Accounting Practice
SCOPA Standing Committee on Public Accounts
NWPL North West Provincial Legislature
MPL Member of the Legislature
NWPT North West Provincial Treasury
COVID-19 92 PRACTICE GOOD HYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Accounting Officer’s Responsibilities and Approval
The Accounting Officer is required by the Financial Management of Parliament and Provincial Legislature Act, 2009(Act No. 10 of 2009), to maintain adequate accounting records and is responsible for the content and integrity of the financial statements and related financial information included in this report. It is the responsibility of the Accounting Officerto ensure that the financial statements fairly present the state of affairs of the Legislature as at the end of the financial year and the results of its operations and cash flows for the period then ended. The external auditors are engaged to expressan independent opinion on the financial statements and were given unrestricted access to all financial records and related data.
The financial statements have been prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting Standards Board.
The financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.
The Accounting Officer acknowledges that he is ultimately responsible for the system of internal financial control established by the Legislature and places considerable importance on maintaining a strong control environment which includes the safeguarding of assets and compliance with relevant legislation. To enable the Accounting Officer to meet these responsibilities, sets standards for internal control aimed at reducing the risk of error or deficit in a cost effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Legislature and all employees are required to maintain the highest ethical standards in ensuring the Legislature’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Legislature is on identifying, assessing, managing and monitoring all known forms of risk across the Legislature. While operating risk cannot be fully eliminated, the Legislature endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.
The Accounting Officer is of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements and that the financial statements are free from material misstatement. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement.
The Accounting Officer has reviewed the Legislature’s cash flow forecast for the year to 31 March 2021 and, in the lightofthis review and the current financial position, he is satisfied that the Legislature has or has access to adequate resources to continue in operational existence for the foreseeable future.
The financial statements set out on pages 4 to 50, which have been prepared on the going concern basis, were approved by the Accounting Officer on 29 May 2020 and were signed on its behalf by:
Secretary of the North West Provincial Legislature
Mmabatho
Friday, 29 May 2020
COVID-19 93 PRACTICE GOOD HYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Accounting Officer’s Report
The Accounting Officer submits his report for the period ended 31 March 2020.
1. Legal form of the Legislature
North West Provincial Legislature was established in terms of Chapter 6 of the Constitution of South Africa.
2. Review of activities
Main business and operations
North West Provincial Legislature’s vision is to build a united, non-racial, non-sexist, democratic and prosperous society in the North West Province.
The North West Provincial Legislature aims to provide services to the people of North West Province by ensuring:
• A vibrant Legislature that is responsive to and addresses the challenges of development facing our people;
• An accountable executive by strengthening oversight on the promises made to our people by government;
• Promotion of efficient and healthy co-operative governance between the three spheres of government; and
• A creative, effective, efficient and transformative administration that helps the Members of the Legislature to fulfil their consti- tutional mandate.
3. Going concern
We draw attention to the fact that at 31 March 2020, the Legislature had an accumulated surplus of R464 911 572 and that the Leg- islature’s total assets exceed its liabilities by R464 911 572.
The financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
The ability of the entity to continue as a going concern is dependent on the fact that the entity would receive appropriation from North West Provincial Treasury for its ongoing operations.
4. Subsequent events
The impact that the COVID-19 pandemic has on the Legislature in the 2020/21 year is disclosed in note 35.
5. Accounting policies
The accounting policies have been applied consistently with the prior year.
6. Bankers
ABSA serves as the bankers for the North West Provincial Legislature.
7. SCOPA resolution
There were no material SCOPA (Standing Committee On Public Accounts) resolutions relating to the Legislature during this finan- cial year.
8. Auditors
Auditor General of South Africa will continue in office for the next financial period.
COVID-19 94 PRACTICE GOOD HYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Accounting Officer’s Report
9. Members and Executives of North West Provincial Legislature
The members and executives of the North West Provincial Legislature during the year and to the date of this report are as follows:
Members - Hon. Dantjie Speaker - Hon. Motsumi Deputy Speaker - Hon. Sebegoe Chief Whip of Majority Party - Hon. Theologo Member - Hon. Diale Member - Hon. Babuile Member - Hon. Cwaile Member - Hon. Nel Member - Hon. Kleynhans Member - Hon. Xaba Member - Hon. Dikolomela Member - Hon. Botswe Member - Hon. Kerileng Member - Hon. Edwards Member - Hon. Rabotapi Member - Hon. Sonakile Member - Hon. Motswana Member - Hon. Mataboge Member - Hon. Williams Member - Hon. Dliso Member - Hon. Lenkopane Member - Hon. Medupe Member
Members of the Executive - Hon. Mokgoro Premier of North West Province - Hon. Kegakilwe Executive Member - Hon. Mosenogi Executive Member - Hon. Lehari Executive Member - Hon. Mohono Executive Member - Hon. Sambatha Executive Member - Hon. Molapisi Executive Member - Hon. Matsemela Executive Member - Hon. Rosho Executive Member - Hon. Tlhapi Executive Member - Hon. Moiloa Executive Member Members and Executive were sworn in on 22 May 2019
Refer to note 26 to the annual financial statements for information on remuneration of members and to note 28 for information on remuneration of management.
COVID-19 95 PRACTICE GOOD HYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Statement of Financial Position as at 31 March 2020
Figures in Rand Note(s) 2020 2019 Restated* Assets Current Assets Receivables from exchange transactions 3 3 578 021 1 959 591 Receivables from non-exchange transactions 4 2 662 258 2 572 258 Cash and cash equivalents 5 76 820 650 4 979 937 83 060 929 9 511 786 Non-Current Assets Property, plant and equipment 6 430 238 737 409 202 946 Intangible assets 7 2 865 060 3 529 123 433 103 797 412 732 069 Total Assets 516 164 726 422 243 855
Liabilities Current Liabilities Finance lease obligation 8 781 851 1 545 832
Provisions 9 5 653 503 5 186 700 Payables from exchange transactions 10 26 519 498 29 790 732 Payable from non-exchange transactions 11 2 403 000 - Employee benefit obligation 12 8 448 506 167 333 43 806 358 36 690 597
Non-Current Liabilities Finance lease obligation 8 432 274 7 912 Employee benefit obligation 12 7 014 522 19 512 790 7 446 796 19 520 702 Total Liabilities 51 253 154 56 211 299 Net Assets 464 911 572 366 032 556 Accumulated surplus 464 911 572 366 032 556
COVID-19 96 PRACTICE GOOD HYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Statement of Financial Performance
Figures in Rand Note(s) 2020 2019 Restated*
Revenue Revenue from exchange transactions Commissions received 96 259 94 074 Interest revenue 13 2 404 163 1 855 773 Total revenue from exchange transactions 2 500 422 1 949 847
Revenue from non-exchange transactions Other revenue Donated funds 840 000 - Transfer revenue - Appropriation 15 500 301 000 540 799 000 Total revenue from non-exchange transactions 501 141 000 540 799 000 Total revenue 14 503 641 422 542 748 847
Expenditure Remuneration cost 16 (208 585 598) (194 732 127) Donations 17 - (129 800) Depreciation and amortisation (21 228 786) (14 820 196)
Finance costs 18 (1 959 338) (1 677 520) Transfers and Subsidies 19 (38 487 914) (52 874 481) Goods & services 20 (139 343 590) (151 238 374) Total expenditure (409 605 226) (415 472 498)
Operating surplus 21 94 036 196 127 276 349 Loss on disposal of assets (117 069) (1 314 776) Actuarial gains 12 4 959 892 866 643 4 842 823 (448 133) Surplus for the period 98 879 019 126 828 216
COVID-19 97 PRACTICE GOOD HYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Statement of Changes in Net Assets
Figures in Rand Accumulated surplus Total net assets
Balance at 01 April 2018 239 204 340 239 204 340 Changes in net assets Surplus for the period Prior year adjustments 30 126 828 216 126 828 216 Total changes 126 828 216 126 828 216 Opening balance as previously reported 365 882 567 365 882 567 Prior year adjustments 30 149 986 149 986 Balance at 01 April 2019 as restated* 366 032 553 366 032 553 Changes in net assets Surplus for the period 98 879 019 98 879 019 Total changes 98 879 019 98 879 019 Balance at 31 March 2020 464 911 572 464 911 572
COVID-19 98 PRACTICE GOOD HYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Statement of Cash Flows
Figures in Rand Note(s) 2020 2019 Restated* Cash flows from operating activities Receipts Appropriation 502 744 000 540 799 000 Interest income 2 165 490 1 965 067 Other receipts 840 000 - 505 749 490 542 764 067 Payments Remuneration costs (208 197 228) (186 396 529) Suppliers (144 590 936) (170 458 469) Donations - (129 800) Transfers an subsidiaries (38 577 914) (52 874 481) (391 366 078) (409 859 279) Net cash flows from operating activities 23 114 383 412 132 904 788
Cash flows from investing activities Purchase of property, plant and equipment 6 (41 717 584) (152 217 134) Proceeds from sale of property, plant and equipment 6 - 615 000 Purchase of intangible assets 7 - (155 910) Net cash flows from investing activities (41 717 584) (151 758 044)
Cash flows from financing activities Finance lease payments (339 619) (2 986 067) Finance costs (485 495) (370 961) Net cash flows from financing activities (825 114) (3 357 028)
Net increase/(decrease) in cash and cash equivalents 71 840 714 (22 210 284) Cash and cash equivalents at the beginning of the year 4 979 937 27 190 222 Cash and cash equivalents at the end of the year 5 76 820 651 4 979 938
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PRACTICE GOODHYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION Financial Statements for the year ended 31 March 2020 ANNUAL COVID-19 REPORT Statement of Comparison of Budget and Actual Amounts
Budget on Cash Basis Figures in Rand Per Adjustments Per Final Amount Adjustment to Amounts on Variance Reference Approved Budget as per AFS comparable comparable Budget basis basis
Statement of Financial Performance
Revenue Revenue from exchange transactions Commissions received - - - 96 259 (96 259) - - Interest income 1 563 000 - 1 563 000 2 404 163 (238 673) 2 165 490 602 490 34.1
Total revenue from exchange transactions 1 563 000 - 1 563 000 2 500 422 (334 932) 2 165 490 602 490
Revenue from non-exchange transactions
Transfer revenue Appropriation 500 341 000 - 500 341 000 500 341 000 2 443 000 540 799 000 2 403 000 34.2 Other income 840 000 - 840 000 840 000 - 840 000 - Total revenue from non-exchange transactions 501 181 000 - 501 181 000 501 141 000 2 443 000 503 584 000 2 403 000 Total revenue 502 744 000 - 502 744 000 503 641 422 2 108 068 505 749 490 3 005 490 Expenditure 100 Remuneration cost (220 274 000) - (220 274 000) (208 585 599) 388 370 (208 197 228) 12 076 773 34.3 Depreciation and amortisation - - - (21 228 786) (21 228 786) - - - Finance costs - - - (1 959 338) (1 959 338) - - -
Transfers and Subsidies (39 715 000) - (39 715 000) (38 487 914) 90 000 (38 577 914) 1 137 086 34.4
Goods and services (159 905 000) - (159 905 000) (139 343 591) (5 247 345) (144 590 936) 15 314 064 34.5
Total expenditure (419 894 000) - (419 894 000) (409 605 228) 18 239 149 (391 366 079) 28 527 921 Operating surplus 82 850 000 - 82 850 000 94 036 195 20 347 217 114 383 411 31 533 411 Capital Assets capitalised (82 850 000) - (82 850 000) (41 717 584) - (41 717 584) 41 132 416 34.6
Actuarial gains/losses - - - 4 959 892 (4 959 892) - - Loss on disposal of assets - - - (117 069) 117 069 - - Actual Amount on Comparable Basis as Presented in the Bud- - - - 57 161 433 15 504 394 72 665 827 72 665 827 get and Actual Comparative Statement
North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Accounting Policies
1. Presentation of Financial Statements
The financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), issued by the Accounting Standards Board and in accordance with Section 56 of the Financial Management of Parliament and Provincial Legislature Act, 2009 (Act No. 10 of 2009) (FMPPLA).
These financial statements have been prepared on an accrual basis of accounting and are in accordance with the historical cost convention as the basis of measurement, unless specified otherwise.
Assets, liabilities, revenues and expenses were not offset, except where offsetting is either required or permitted by a Standard of GRAP.
A summary of the significant accounting policies, which have been consistently applied in the preparation of these financial state- ments, are disclosed below.
These accounting policies are consistent with the previous period.
1.1 Presentation currency
These financial statements are presented in South African Rand, which is the functional currency of the Legislature.
1.2 Going concern assumption
These financial statements have been prepared based on the expectation that the Legislature will continue to operate as a going concern for at least the next 12 months.
1.3 Significant judgements and sources of estimation uncertainty
In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts repre- sented in the financial statements and related disclosures. Use of available information and the application of judgement is inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements. Significant judgements include:
Receivables from exchange transactions
The Legislature assesses its trade receivables for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in surplus or deficit. Judgements are made as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.
Impairment testing
The impairment loss is the amount by which the carrying amount of an asset exceeds its recoverable service amount which is the higher of its fair value less costs to sell and its value in use. These calculations require the use of estimates and assumptions. It is reasonably possible that assumptions may change, which may then impact our estimations and may then require a material adjust- ment to the carrying value of tangible assets.
Provisions
Provisions were raised and management determined an estimate based on the information available. Additional disclosure of these estimates of provisions are included in note 9 - Provisions.
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1.3 Significant judgements and sources of estimation uncertainty (continued)
Finance lease assets (Cellphones & tablets)
The net book value of finance leases for cellphones and tablets were calculated with certain judgements & assumptions, as follows:
- Prime interest rate was used as the incremental borrowing rate at the inception of each agreement. - The fair value of the physical devices could not be determined therefore we calculated it as the difference in the fair value ofthe total contract payments and the fair value of the free data, talk-time and SMS’s. - The fair value of the data, talk-time and SMS’s could also not be determined as at the inception of the agreements thereforewe calculated using the current market related value. The price of a single SMS was calculated at 35c (2019: 35c) per SMS and 1,000 (2019: 1,000) minutes of talk-time and 50 (2019: 50) SMS’s per month were used for contracts with unlimited free minutes & mes- sages. The market related value varies, based on different packages. - No asset was capitalised where the present value of the data, talk-time and SMS’s exceeds the present value of the totalcontract payment. These are mostly where no devices apart from a USB dongle was provided. - If an agreement commenced mid-way through a month, we assumed payment took place on a pro-rata basis, similarly at theend of the agreement.
Useful lives and residual value of intangible assets & property, plant & equipment
The NWPL’s management determines the estimated useful lives and related depreciation and amortisation charges for property, plant and equipment, and intangible assets. This estimate is based on the pattern in which an asset’s future economic benefits or service potential are expected to be consumed by the entity.
The NWPL’s management determines the estimated residual value as the estimated amount that the legislature would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life.
Long term employee benefits
The present value of long term employee benefits (i.e. post-employment and other long term employee benefits) depends on a num- ber of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) include the discount rate. Any changes in these assumptions will impact on the carrying amount of the obligation
Other key assumptions for pension obligations are based on current market conditions. Additional information is disclosed in Note 12.
Impairment of receivables
An impairment loss on receivables is recognised in surplus and deficit when there is objective evidence that they are impaired. The impairment is measured as the difference between the receivables’ carrying amount and the present value of estimated future cash flows discounted at the effective interest rate, computed at initial recognition.
1.4 Property, plant and equipment
Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the produc- tion or supply of goods or services, rental to other, or for administrative purposes, and are expected to be used during more than one period.
The cost of an item of property, plant and equipment is recognised as an asset when:
• it is probable that future economic benefits or service potential associated with the item will flow to the Legislature; and • the cost of the item can be measured reliably.
Property, plant and equipment is initially measured at cost.
The cost of an item of property, plant and equipment is the purchase price and other costs attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Trade discounts and rebates are deducted in arriving at the cost.
Where an asset is acquired through a non-exchange transaction, its cost is its fair value as at date of acquisition.
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1.4 Property, plant and equipment (continued)
Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combina- tion of monetary and non-monetary assets, the asset acquired is initially measured at fair value (the cost). If the acquired item’s fair value was not determinable, it’s deemed cost is the carrying amount of the asset(s) given up.
The costs includes costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred sub- sequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.
Recognition of costs in the carrying amount of an item of property, plant and equipment ceases when the item is in the location and condition necessary for it to be capable of operating in the manner intended by management.
Buildings comprises of constructed buildings.
Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.
Any decrease in an asset’s carrying amount, as a result of a revaluation, is recognised in surplus or deficit in the current period. The decrease is debited in revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect of that asset.
Minor assets with a value of R 2,000 or less are not capitalised as property, plant and equipment but expensed to the Statement of Financial Performance. This policy does not apply to library books.
Property, plant and equipment are depreciated on the straight line basis over their expected useful lives to their estimated residual value.
The useful lives of items of property, plant and equipment have been assessed as follows: Item Depreciation method Average useful life Furniture and fixtures Straight line 15 Years
Motor vehicles Straight line 7 - 12 Years Office equipment Straight line 10 - 17 Years Computer equipment Straight line 6 - 14 Years Audio visual equipment Straight line 12 - 15 Years Artwork Straight line 25 Years Library books Straight line 25 - 50 Years Finance Lease assets Straight line Shorter of lease term and useful life Building Straight line 30 Years Porta Cabins Straight line 10 Years Generator Straight line 8 Years CCTV System Straight line 8 Years Public Address and Evauation System Straight line 8 Years Access Control System Straight line 8 Years Fire Detection and Automation Fire and Supression System Straight line 8 Years Asset Control Equipment System Straight line 8 Years Voice and Data System Straight line 8 Years Building Management System Straight line 8 Years Air Conditioning Straight line 10 Years Boundary Wall Straight line 30 Years Clearview fence Straight line 15 Years Car Ports Straight line 15 Years Artworks Straight line 10 Years Freestanding Electric Fence 2,4m Straight line 15 Years Lift Straight line 20 Years
The residual value, the useful life and depreciation method of each asset are reviewed at least at the end of each reporting date. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate. The useful life of library books was extended from 25 years to 25 - 50 years.
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1.4 Property, plant and equipment (continued)
Reviewing the useful life of an asset on an annual basis does not require the entity to amend the previous estimates unless expecta- tions differ from the previous estimate.
Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreci- ated separately.
The depreciation charge for each period is recognised in surplus or deficit unless it is included in the carrying amount of another asset.
Repairs and maintenance relating to items of property, plant and equipment are recognised as an expense when they are incurred.
Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic bene- fits or service potential expected from the use of the asset.
The gain or loss arising from the derecognition of an item of property, plant and equipment is included in surplus or deficit. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.
1.5 Intangible assets
An intangible asset is an identifiable non-monetary asset without physical substance.
An asset is identifiable if it either:
• is separable, i.e. is capable of being separated or divided from an entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable assets or liability, regardless of whether the Legislature intends to do so; or
• arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable or sepa- rable from the Legislature or from other rights and obligations.
A binding arrangement describes an arrangement that confers similar rights and obligations on the parties to it as if it were in the form of a contract.
An intangible asset is recognised when:
• it is probable that the expected future economic benefits or service potential that are attributable to the asset will flow to the Legislature; and
• the cost or fair value of the asset can be measured reliably.
Intangible assets are initially measured at cost.
The Legislature assesses the probability of expected future economic benefits or service potential using reasonable and support- able assumptions that represent management’s best estimate of the set of economic conditions that will exist over the useful life of the asset.
Where an intangible asset is acquired through a non-exchange transaction, its initial cost at the date of acquisition is measured at its fair value as at that date.
Intangible assets are carried at cost less any accumulated amortisation and any impairment losses.
The depreciable amount of an intangible asset with a finite useful life is allocated on a systematic basis over its useful life. Am- ortisation begins when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.
The amortisation charge for each period is recognised in surplus or deficit.
The amortisation period and the amortisation method for intangible assets are reviewed at each reporting date.
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1.5 Intangible assets (continued)
Amortisation is provided to write down the intangible assets, on a straight line basis, to their residual values as follows:
Item Depreciation Method Average Useful Tips Computer software Straight line 8- 15 years
Intangible assets are derecognised:
• on disposal; or
• when no future economic benefits or service potential are expected from its use or disposal.
The gain or loss arising from the derecognition of intangible assets is included in surplus or deficit when the asset is derecognised (unless the Standard of GRAP on leases requires otherwise on a sale and leaseback).
1.6 Financial instruments
A financial instrument is any contract that gives rise to a financial asset of one Legislature and a financial liability or a residual inter- est of another Legislature.
The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is- mea sured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest meth- od of any difference between that initial amount and the maturity amount, and minus any reduction (directly or through the use of an allowance account) for impairment or uncollectibility.
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation.
Derecognition is the removal of a previously recognised financial asset or financial liability from an Legislature’s statement of finan- cial position.
The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of fi- nancial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculat- ing the effective interest rate, an Legislature shall estimate cash flows considering all contractual terms of the financial instrument (for example, prepayment, call and similar options) but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate (see the Standard of GRAP on Revenue from Exchange Transactions), transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to reliably estimate the cash flows or the expected life of a financial instrument (or group of financial instruments), the Legislature shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments).
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm’s length transaction.
A financial asset is: .cash; .a residual interest of another Legislature; or .a contractual right to: - receive cash or another financial asset from another Legislature; or - exchange financial assets or financial liabilities with another Legislature under conditions that are potentially favourable to the Legislature.
A financial liability is any liability that is a contractual obligation to: .deliver cash or another financial asset to another Legislature; or .exchange financial assets or financial liabilities under conditions that are potentially unfavourable to the Legislature.
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1.6 Financial Instruments (continued)
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk.
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
Liquidity risk is the risk encountered by an Legislature in the event of difficulty in meeting obligations associated with financial liabili- ties that are settled by delivering cash or another financial asset.
Loans payable are financial liabilities, other than short-term payables on normal credit terms.
A financial asset is past due when a counterparty has failed to make a payment when contractually due.
Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial asset or -fi nancial liability. An incremental cost is one that would not have been incurred if the Legislature had not acquired, issued or disposed of the financial instrument.
Financial instruments at cost are investments in residual interests that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured.
Financial instruments at fair value comprise financial assets or financial liabilities that are:
• derivatives;
• combined instruments that are designated at fair value;
• instruments held for trading. A financial instrument is held for trading if:
- it is acquired or incurred principally for the purpose of selling or repurchasing it in the near-term; or
- on initial recognition it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short term profit-taking;
- non-derivative financial assets or financial liabilities with fixed or determinable payments that are designated at fair value at initial recognition; and
- financial instruments that do not meet the definition of financial instruments at amortised cost or financial instru ments at cost.
Classification
The Legislature has the following types of financial assets (classes and category) as reflected on the face of the statement of finan- cial position or in the notes thereto:
Class Category
Receivables from exchange and non-exchange transactions Financial asset measured at amortised cost Cash and cash equivalents Financial asset measured at amortised cost
The Legislature has the following types of financial liabilities (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:
Class Category
Payables from exchange and non-exchange transactions Financial liability measured at amortised cost
Initial recognition
The Legislature recognises a financial asset or a financial liability in its statement of financial position when the Legislature be- comes a party to the contractual provisions of the instrument.
The Legislature recognises financial assets using trade date accounting.
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1.6 Financial instruments (continued)
The Legislature recognises a financial asset or a financial liability in its statement of financial position when the Legislature be- comes a party to the contractual provisions of the instrument.
The Legislature recognises financial assets using trade date accounting.
Initial measurement of financial assets and financial liabilities
The Legislature measures a financial asset and financial liability initially at its fair value plus transaction costs that are directly attrib- utable to the acquisition or issue of the financial asset or financial liability.
The Legislature measures a financial asset and financial liability initially at its fair value [if subsequently measured at fair value].
Subsequent measurement of financial assets and financial liabilities
The Legislature measures all financial assets and financial liabilities after initial recognition using the following categories:
• Financial instruments at fair value.
• Financial instruments at amortised cost.
• Financial instruments at cost.
All financial assets measured at amortised cost, or cost, are subject to an impairment review.
Reclassification
The Legislature does not reclassify a financial instrument while it is issued or held unless it is:
• combined instrument that is required to be measured at fair value; or
• an investment in a residual interest that meets the requirements for reclassification.
Gains and losses
A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognised in surplus or deficit.
For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired, or through the amortisation process.
Impairment and uncollectibility of financial assets
The Legislature assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired.
Financial assets measured at amortised cost:
If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced directly OR through the use of an allowance account. The amount of the loss is recognised in surplus or deficit.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed directly OR by adjusting an allowance account. The reversal does not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus or deficit.
Financial assets measured at cost:
If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.
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1.6 Financial instruments (continued)
Derecognition
Financial assets
The Legislature derecognises financial assets using trade date accounting.
The Legislature derecognises a financial asset only when:
• the contractual rights to the cash flows from the financial asset expire, are settled or waived;
• the Legislature transfers to another party substantially all of the risks and rewards of ownership of the financial asset; or
• the Legislature, despite having retained some significant risks and rewards of ownership of the financial asset, has transferred control of the asset to another party and the other party has the practical ability to sell the asset in its entirety to an unrelated third party, and is able to exercise that ability unilaterally and without needing to impose additional restrictions on the transfer. In this case, the entity :
- derecognise the asset; and
- recognise separately any rights and obligations created or retained in the transfer.
On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received is recognised in surplus or deficit.
Financial liabilities
The Legislature removes a financial liability (or a part of a financial liability) from its statement of financial position when it is extin- guished — i.e. when the obligation specified in the contract is discharged, cancelled, expires or waived.
The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to an- other party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in surplus or deficit. Any liabilities that are waived, forgiven or assumed by another entity by way of a non-exchange transaction are accounted for in accordance with the Standard of GRAP on Revenue from Non-exchange Transactions (Taxes and Transfers).
Presentation
Interest relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.
Losses and gains relating to a financial instrument or a component that is a financial liability is recognised as revenue or expense in surplus or deficit.
A financial asset and a financial liability are only offset and the net amount presented in the statement of financial position when the Legislature currently has a legally enforceable right to set off the recognised amounts and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
1.7 Leases
A lease is classified as a finance lease if it ansferstr substantially all the risks and rewards incidental to ownership. A lease is classi- fied as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.
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1.7 Leases (continued)
Finance leases - lessee
Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.
The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.
The total future minimum lease payments within a year is disclosed under current liability and the future minimum lease payments later than one year is disclosed under non-current liability.
Minimum lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of on the remaining balance of the liabili- ty.
Operating leases - lessee
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease asset or liability.
1.8 Impairment of non-cash-generating assets
Cash-generating assets are assets used with the objective of generating a commercial return. Commercial return means that posi- tive cash flows are expected to be significantly higher than the cost of the asset.
Non-cash-generating assets are assets other than cash-generating assets.
Impairment is a loss in the future economic benefits or service potential of an asset, over and above the systematic recognition of the loss of the asset’s future economic benefits or service potential through depreciation (amortisation).
Carrying amount is the amount at which an asset is recognised in the statement of financial position after deducting any accumulat- ed depreciation and accumulated impairment losses thereon.
A cash-generating unit is the smallest identifiable group of assets managed with the objective of generating a commercial return that generates cash inflows from continuing use that are largely independent of the cash inflows from other assets or groups of assets.
Costs of disposal are incremental costs directly attributable to the disposal of an asset, excluding finance costs and income tax expense.
Depreciation (Amortisation) is the systematic allocation of the depreciable amount of an asset over its useful life.
Fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s length transaction between knowledge- able, willing parties, less the costs of disposal.
Recoverable service amount is the higher of a non-cash-generating asset’s fair value less costs to sell and its value in use.
Useful life is either:
• The period of time over which an asset is expected to be used by the Legislature; or
• the number of production or similar units expected to be obtained from the asset by the Legislature.
1.9 Employee benefits
Short-term employee benefits
The cost of short-term employee benefits, (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.
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1.9 Employee benefits (continued)
Defined benefit plans
For defined benefit plans the cost of providing the benefits is determined using the projected credit method.
Actuarial valuations are conducted on an annual basis by independent actuaries separately for each plan.
Past service costs are recognised immediately to the extent that the benefits are already vested, and are otherwise amortised on a straight line basis over the average period until the amended benefits become vested.
Gains or losses on the curtailment or settlement of a defined benefit plan is recognised when the Legislature is demonstrably com- mitted to curtailment or settlement.
When it is virtually certain that another party will reimburse some or all of the expenditure required to settle a defined benefit obli- gation, the right to reimbursement is recognised as a separate asset. The asset is measured at fair value. In all other respects, the asset is treated in the same way as plan assets. In surplus or deficit, the expense relating to a defined benefit plan is presented as the net of the amount recognised for a reimbursement.
The amount recognised in the statement of financial position represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service costs, and reduces by the fair value of plan assets.
Other long term employee benefits
The long service awards and exit gratuity benefit provided by the Legislature fall under the definition of other long term employee benefits as defined in GRAP 25.
Other long-term benefits are not usually subject to the same degree of uncertainty as the measurement of post-employments benefits and are therefore not as complex to measure. Notwithstanding above, the method used to account for long-term benefits is similar to the method used to account for defined benefit plans.
The NWPL used an adaptation of the disclosure requirements for post-employment benefits to devise the disclosure of the other long term employee benefit obligation, as the Standard does not require specific disclosures about other long-term employee bene- fits.
1.10 Provisions and contingencies
Provisions are recognised when:
• the Legislature has a present obligation as a result of a past event;
• it is probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obliga- tion; and
• a reliable estimate can be made of the obligation.
The amount of a provision is the best estimate of the expenditure expected to be required to settle the present obligation at the reporting date.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Provisions are reversed if it is no longer probable that an outflow of resources embodying economic benefits or service potential will be required, to settle the obliga- tion.
Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 25.
1.11 Commitments
Items are classified as commitments when the Legislature has committed itself to future transactions that will normally result in the outflow of cash.
The total minimum lease payments under non-cancellable operating leases for each of the following periods are disclosed in the financial statements:
• Not later than one year;
• Later than one year and not later than five years, and
• Later than five years.
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1.11 Commitments (continued)
Commitments for which disclosure is necessary to achieve a fair presentation should be disclosed in a note to the financial state- ments, if both the following criteria are met:
• Contracts should be non-cancellable or only cancellable at significant cost (for example, contracts for computer or building maintenance services); and
• Contracts should relate to something other than the routine, steady, state business of the Legislature – therefore salary commit- ments relating to employment contracts or social security benefit commitments are excluded.
1.12 Revenue from exchange transactions
Revenue is the gross inflow of economic benefits or service potential during the reporting period when those inflows result in an increase in net assets, other than increases relating to contributions from owners.
An exchange transaction is one in which the Legislature receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange.
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.
Measurement
Revenue from exchange transactions is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.
Interest income
Revenue arising from the use by others of the Legislature’s assets yielding interest, royalties and dividends or similar distributions is recognised when:
• It is probable that the economic benefits or service potential associated with the transaction will flow to the Legislature, and
• The amount of the revenue can be measured reliably.
Interest is recognised, in surplus or deficit, using the effective interest rate method.
Commission income
Commission income is recognised as revenue when it becomes receivable.
1.13 Revenue from non-exchange transactions
Revenue comprises gross inflows of economic benefits or service potential received and receivable by the Legislature, which rep- resents an increase in net assets, other than increases relating to contributions from owners.
Exchange transactions are transactions in which one Legislature receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of cash, goods, services, or use of assets) to another Legislature in exchange.
Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, the Legislature ei- ther receives value from another Legislature without directly giving approximately equal value in exchange, or gives value to another Legislature without directly receiving approximately equal value in exchange.
Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes.
Transfer payments are expensed.
Recognition
An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to the extent that a liability is also recognised in respect of the same inflow.
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1.13 Revenue from non-exchange transactions (continued)
Measurement
Revenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the Legislature.
Appropriation revenue
Appropriation revenue is transfers received from the North West Provincial Treasury in terms of the Appropriation Act, 2018 (Act No. 2 of 2018).
1.14 Borrowing costs
Borrowing costs are interest and other expenses incurred by the Legislature in connection with the borrowing of funds.
1.15 Comparative figures and prior period errors
When the presentation or classification of items in the annual financial statements is amended, prior period comparative amounts are restated. The nature and reason for the reclassification is disclosed. Where accounting errors have been identified in the current period, the correction is made retrospectively as far as is practicable, and the prior period comparatives are restated accordingly. Where there has been a change in accounting policy in the current period, the adjustment is made retrospectively as far as is practi- cable, and the prior year comparatives are restated accordingly.
1.16 Unauthorised expenditure
Unauthorised expenditure means:
• overspending by the Legislature or a main division within the legislature;
• any expenditure of donor funds for a purpose not specified in the agreement with the donor; and
• any expenditure from the Legislature’s approved budget or a main division within that budget for a purpose unrelated to the approved budget or main division, subject to section 22 of the FMPPLA.
All expenditure relating to unauthorised expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and when recov- ered, it is subsequently accounted for as revenue in the statement of financial performance.
1.17 Fruitless and wasteful expenditure
Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.
All expenditure relating to fruitless and wasteful expenditure is recognised as an expense in the statement of financial performance in the year that the expenditure was incurred. The expenditure is classified in accordance with the nature of the expense, and where recovered, it is subsequently accounted for as revenue in the statement of financial performance.
1.18 Irregular expenditure
Irregular expenditure as defined in paragraph 63 of the FMPPLA Act is expenditure, other than unauthorised expenditure, incurred in contravention of, or that is not in accordance with, a requirement of this Act or any other applicable legislation, including -
(a) this Act; or
(b) the State Tender Board Act, 1968 (Act No. 86 of 1968), or any regulations made in terms of the Act; or
(c) any provincial legislation providing for procurement procedures in that provincial government.
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1.18 Irregular expenditure (continued)
Irregular expenditure that was incurred and identified during the current financial year and which was condoned before year end and/ or before finalisation of the financial statements is recorded appropriately in the irregular expenditure register. In such an instance, no further action is also required with the exception of updating the note to the financial statements.
Irregular expenditure that was incurred and identified during the current financial year and for which condonement is being awaited at year end is recorded in the irregular expenditure register. No further action is required with the exception of updating the note to the financial statements.
Where irregular expenditure was incurred in the previous financial year and is only condoned in the following financial year, the regis- ter and the disclosure note to the financial statements is updated with the amount condoned.
Irregular expenditure that was incurred and identified during the current financial year and which was not condoned by the relevant authority is recorded appropriately in the irregular expenditure register. If liability for the irregular expenditure can be attributed to a person, a debt account is created if such a person is liable in law. Immediate steps are thereafter taken to recover the amount from the person concerned. If recovery is not possible, the accounting officer writes off the amount as debt impairment and discloses such in the relevant note to the financial statements. The irregular expenditure register is also updated accordingly. If the irregular expenditure has not been condoned and no person is liable in law, the expenditure related thereto remains against the relevant programme/expenditure item, is disclosed as such in the note to the financial statements and updated accordingly in the irregular expenditure register.
1.19 Budget information
Legislature is typically subject to budgetary limits in the form of appropriations, which are given effect through authorising legisla- tion, appropriation or similar.
The approved budget is prepared on a modified cash basis and presented by economic classification linked to performance out- come objectives.
The financial statements and the budget are not on the same basis of accounting therefore a reconciliation between the statement of financial performance and the budget have been included in the financial statements. Refer to note 34 explanation of budget differences.
A comparison between actual amounts and final appropriation per major classification of expenditure is included in the Budget Statement.
Comparative information is not required.
1.20 Related parties
The Legislature operates in an economic sector currently dominated by entities directly or indirectly owned by the South African Government. As a consequence of the constitutional independence of the three spheres of government in South Africa, only entities within the provincial sphere of government are considered to be related parties.
Management are those persons responsible for planning, directing and controlling the activities of the Legislature, including those charged with the governance of the Legislature in accordance with legislation, in instances where they are required to perform such functions.
Key management is defined as being individuals within the authority that are responsible for planning, directing and controlling the activities of the NWPL, including those charged with the governance of the entity in accordance with legislation, in instances where they are required to perform such functions. The NWPL regards all individuals at executive management as key management per the definition of GRAP 20 - Related parties.
Close members of the family of a person are considered to be those family members who may be expected to influence, or be influ- enced by, that management in their dealings with the Legislature.
Only transactions with related parties not at arm’s length or not in the ordinary course of business are disclosed.
Related party transactions and balances are disclosed in note 26 - Related Parties.
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1.21 Events after reporting date
Events after reporting date are those events, both favourable and unfavourable, that occur between the reporting date and the date when the financial statements are authorised for issue. Two types of events can be identified:
• those that provide evidence of conditions that existed at the reporting date (adjusting events after the reporting date); and
• those that are indicative of conditions that arose after the reporting date (non-adjusting events after the reporting date).
The Legislature adjusts the amount recognised in the financial statements to reflect adjusting events after the reporting date once the event occurred.
The Legislature discloses the nature of the event and an estimate of its financial effect or a statement that such estimate cannot be made in respect of all material non-adjusting events, where non-disclosure could influence the economic decisions of users taken on the basis of the financial statements.
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2. New standards and interpretations
2.1 Standards and interpretations issued, but not yet effective
The possible impact of Standards approved, but not yet effective was assessed and none were identified that will be relevant to the Legislature’s activities.
3. Receivables from exchange transactions: Prepayments: Advances paid 960 864 124 826 Salary control accounts 60 640 106 032 Other receivables 3 656 070 3 008 256 Staff debt 221 249 86 672 Provisions for bad debt (1 320 802) (1 366 195) 3 578 021 1 959 591
Fair value of trade and other receivables
The fair value of trade and other receivables approximates the carrying amounts.
Trade and other receivables past due but not impaired
Trade and other receivables which were past due but not considered to be impaired were R3 578 021: 2020, (2019: R 1 959 591).
The ageing of amounts past due but not impaired is as follows:
Current (Within 30 days) 369 659 86 806 90+ days 3 208 361 1 872 785
Trade and other receivables impaired
As of 31 March 2020, trade and other receivables of R 1 320 802 (2019: R 1 366 195) were impaired and provided for. The factors considered in determining the impairment were long outstanding debt and the probability of recovering this debt is slight.
The ageing of these receivables is as follows:
Provisions (90+ days) 1 320 802 1 366 195
Reconciliation of provision for impairment of trade and other receivables Opening balance (1 366 195) (1 561 745) Amounts written off as uncollectible - 193 572 Amount collected 45 393 1 978 (1 320 802) (1 366 195)
The creation and release of the allowance for credit losses has been included in operating expenses in surplus or deficit. Impair- ment testing was performed and the impairment amount relates to long outstanding debt with low certainty of recoverability.
The Legislature does not hold any collateral as security.
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4. Receivables from non-exchange transactions
Other receivables 2 662 258 2 572 258
Other receivables relates to transfer payments to be received after year end.
North West Provincial Legislature does not hold any collateral as security.
Trade and other receivables past due but not impaired
Receivables from non-exchange transactions (90+ days) 2 662 258 2 572 258
The fair values of receivables from non-exchange transactions approximate their carrying amounts. No further adjustment is re- quired.
Receivables from non-exchange transactions impaired
No receivables from non-exchange transactions were impaired in the 2020 or 2019 financial year.
5. Cash and cash equivalents
Cash and cash equivalents consist of:
ABSA Expense account 65 588 502 4 452 950 ABSA Salary account 11 232 148 526 987 76 820 650 4 979 937
The bank balances consist of the following accounts:
Name of account Type of account Date opened - ABSA Expense account 18 July 2007 - ABSA Salary account 18 July 2007
Cash at banks earn interest at floating rates based on daily bank deposits rates. The fair value of cash equivalents approximates their carrying value as cash equivalents are readily convertible to cash.
Total facilities for credit cards
The Legislature has the the following credit cards with the respective limits. Any amounts utilised during the month is settled the following month in full
Credit Cards Credit card 475 000 475 000 Fleet card 90 000 90 000 565 000 565 000
6. Property, plant and equipment 2020 2019
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Cost Accumulated Carrying Cost / Accumulated Carrying depreciation value Valuation depreciation value and impair- and ment impairment
Work in progress: Buildings 69 266 988 - 69 266 988 36 854 548 - 36 854 548 Building: East Wing 344 853 593 (21 840 620) 323 012 973 344 853 593 (7 463 521) 337 390 072 Furniture and fixtures 9 871 257 (4 004 376) 5 866 881 8 025 741 (3 454 365) 4 571 376 Motor vehicles 7 287 797 (1 606 920) 5 680 877 6 089 512 (880 077) 5 209 435 Office equipment 2 179 634 (508 749) 1 670 885 1 738 023 (345 617) 1 392 406 Computer equipment 17 533 862 (7 042 388) 10 491 474 14 286 964 (5 504 300) 8 782 664 Audio visual equipment 16 237 608 (3 885 509) 12 352 099 15 642 382 (2 760 004) 12 882 378 Artwork 287 237 (56 504) 230 733 287 237 (44 996) 242 241 Library books 780 858 (305 049) 475 809 770 278 (276 881) 493 397 Finance lease assets (Cell- 1 813 081 (623 063) 1 190 018 1 333 537 (915 333) 418 204 phones & tablets) Finance lease assets - - - 6 840 745 (5 874 520) 966 225 (Printers and copiers)
Total 470 111 915 (39 873 178) 430 238 737 436 722 560 (27 519 614) 409 202 946
Reconciliation of property, plant and equipment - 2020 Opening Additions Disposals Depreciation Total balance Work in progress: Buildings 36 854 548 32 412 440 -- 69 266 988 Building: East Wing 337 390 072 - - (14 377 099) 323 012 973 Furniture and fixtures 4 571 376 1 849 316 (1 367) (552 444) 5 866 881 Motor vehicles 5 209 435 1 198 285 - (726 843) 5 680 877 Office equipment 1 392 406 441 611 - (163 132) 1 670 885 Computer equipment 8 782 664 3 348 177 (49 993) (1 589 374) 10 491 474 Audio visual equipment 12 882 378 692 124 (65 711) (1 156 692) 12 352 099 Artwork 242 241 - - (11 508) 230 733 Library books 493 397 10 580 - (28 168) 475 809 Finance lease assets (Cellphones & 418 204 1 765 052 - (993 238) 1 190 018 tablets) Finance lease assets (Printers & copiers) 966 225 - - (966 225) - 409 202 946 41 717 585 (117 071) (20 564 723) 430 238 737
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6. Property, plant and equipment (continued) Reconciliation of property, plant and equipment - 2019
Opening Additions Disposals Transfers Depreciation Total balance
Work in progress: Buildings 256 607 112 147 508 648 - (367 261 212) - 36 854 548 Building: East Wing - - - 344 853 593 (7 463 521) 337 390 072 Furniture and fixtures 3 211 767 29 358 (183 743) 2 001 922 (487 928) 4 571 376 Motor vehicles 3 785 271 3 306 194 (1 278 616) - (603 414) 5 209 435 Office equipment 614 420 41 594 (51 260) 914 992 (127 340) 1 392 406 Computer equipment 4 699 963 1 095 048 (231 064) 4 983 570 (1 764 853) 8 782 664 Audio visual equipment 1 840 757 135 880 (159 684) 11 758 776 (693 351) 12 882 378 Artwork 305 352 - (49 353) - (13 758) 242 241 Library books 528 301 - (5 568) - (29 336) 493 397 Finance lease assets (Cell- 1 021 937 69 866 - - (673 599) 418 204 phones & tablets) Finance lease assets (Printers 3 215 927 30 546 - - (2 280 248) 966 225 & copiers) 275 830 807 152 217 134 (1 959 288) (2 748 359) (14 137 348) 409 202 946
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6. Property, plant and equipment (continued)
Pledged as security
No property, plant and equipment has been pledged as securities for liabilities.
Fully depreciated assets
Fully depreciated assets still in use are included in the office and computer equipment balance. The majority are old assets pur- chased in 2007-2009 for which the useful lives have already been extended on 2 occasions and management plans to dispose and replace these assets in the near future.
No adjustment in the financial statements were made as these assets are not material. If the useful lives of computer equipment are extended, the net book value will be adjusted by R29 199 (2019: R104 779) which is 0.28% (2019: 1.19%) of the population. The net book value of office equipment, will be adjusted by R 972 (2019: R4 941) which is 0.06% (2019: 0.35%) of the population.
Change in accounting estimates
The useful life of library books was estimated in prior financial years to be 25 years. At the beginning of the current period, man- agement has revised the useful life to 25 - 50 years. The effect of the change in accounting estimate has resulted in a decrease in depreciation expense amounting to R1,138 for the current period. The effect on future periods is estimated to be R969.
Details of building
Extension of the East Wing (Legislature Building) The NWPL has been allocated funds in the 2016/19 MTEF period for infrastructure development which relates to the extension of the east wing for the building occupied by the Legislature. The capital expenditure incurred for this project were capitalised as work in progress in the prior financial years.
The construction was finalised during the 2018/19 financial period.The building with a cost of R344 853 593 is subject to s42 of the PFMA transfer to the North West Department of Public Works and Roads in the next financial period. Work in progress Work in progress consists of work already carried out on the refurbishment of the Chamber. To date costs has been capitalised under work in progress as follows:
- Capitalised expenditure 69 266 988 36 854 548
Repairs and maintenance
Repairs and maintenance relating to property, plant and equipment amounting to R6,705,282 (2019: R1,471,141) were incurredduring the current year.
A fixed asset register containing the information required by section 30 of the FMPPL Act is available for inspection at thelegislature.
7. Intangible assets
2020 2019 Cost / Accumulated Carrying Cost / Accumulated Carrying Valuation amortisation and value Valuation amortisation and value accumulated accumulated impairment impairment
Computer software 7 547 344 (4 682 284) 2 865 060 7 818 858 (4 289 735) 3 529 123
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Reconciliation of intangible assets - 2020
Opening balance Amortisation Total
Computer software 3 529 123 (664 063) 2 865 060
Reconciliation of intangible asset - 2019
Opening Additions Disposals balance Transfers Amortisation Total Computer software 1 308 194 155 910 (491) 2 748 359 (682 849) 3 529 123
Pledged as security
No intangible assets have been pledged as securities for liabilities.
No contractual commitment exists for the acquisition of intangible assets.
8. Finance lease obligation
Minimum lease payments due - within one year 864 346 1 595 971 - in second to fifth year inclusive 449 396 8 181 1 313 742 1 604 152 less: future finance charges (99 617) (50 408) Present value of minimum lease payments 1 214 125 1 553 744
Present value of minimum lease payments due - within one year 781 852 1 545 832 - in second to fifth year inclusive 432 273 7 912 1 214 125 1 553 744
Non-current liabilities 432 273 7 912 Current liabilities 781 852 1 545 832 1 214 125 1 553 744
It is the Legislature’s policy to lease cellphones & tablets for staff members under finance leases. The finance lease obligation also included the rental of 9 photocopiers incurred during the previous financial years, which expired in the current financial year.
Contracts relating to cellphones and tablets have an option for renewal after 2 years. No restrictions are imposed by the lease ar- rangements and no purchase options exist for these assets.
The average lease term for cellphones and tablets are 2 years and 3 years for the photocopiers/printers.
Interest rates are fixed at the inception of the contract date, which was linked to prime.The average effective borrowing rate was 10.25% (2019: 10,25%).
All leases have fixed repayments and no arrangements have been entered into for contingent rent.
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9. Provisions Reconciliation of provisions - 2020 Opening Additions Utilised during the Reversed during the Total Balance year year Provision for bonus 5 186 700 5 653 503 (4 714 352) (472 348) 5 653 503 Reconciliation of provisions - 2019
Opening Utilised during the Reversed during the Balance Additions year year Total Provision for bonus 4 590 000 5 186 700 (3 504 921) (1 085 079) 5 186 700
The provision represents management’s best estimate of the Legislature’s liability for performance bonuses. The provision raised, is an estimates of the provision based on the anticipated performance of employees.
This anticipated performance is based on experience and performance with the employees of the company, taking into account per- formance trends in the prior periods. Furthermore, the amount of the performance bonus is determined with reference to the salary scales as at the end of the financial year.
The provision would be forfeited if the staff member resigns, prior to when it becomes due, thus the timing and value of these bo- nuses are uncertain.
10. Payables from exchange transactions
Trade and other payables 12 818 929 16 723 456 Accrued leave pay 9 326 613 8 811 848 13th cheque accruals 4 373 956 4 255 428 26 519 498 29 790 732
Fair value of trade and other payables
Payables from exchange transactions 26 519 498 29 790 732
The fair value of trade and other payables approximates the carrying amount.
Accruals for 13th cheque amounts to one month’s salary paid in the month in which the employees celebrate their birthdays. The 13th cheque is calculated pro-rated based on the actual months employed if the employee only worked for part of the year.
Accrual for leave pay relates to employees’ entitlement to annual leave that is due as a result of services rendered by employees up to reporting date. The accrual has been calculated based on salary rates effective on the reporting date.
11. Payables from non-exchange transactions
Amounts payable to Provincial Revenue Fund 2 403 000 -
The amount payable is due to a deposit incorrectly paid from the Provincial Revenue Fund during the 2019/20 period.
The fair value of payables from non-exchange transactions approximates the carrying amount
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12. Employee benefit obligations
Defined benefit plan
Actuarial valuations were performed to determine the financial obligation to the Legislature. The obligation is determined by calculating the present value of the possible long service award and gratuity benefit payable throughout the employee’s service guided by the Legislature’s policy. a) Other long term benefits Long service award (Employees)
Employees are entitled to a long service award upon attaing a required number of years’ service: - 10 years: R 10,000 - 20 years: R 20,000 - 30 years: R 30,000 - Retirement: R 10,000
Exit gratuity benefit (Members)
An Office Bearer who has served a minimum of five years and whose service is terminated is entitled to receive a once-off gratuity equal to four times pensionable monthly salary, for each five-year term, or a pro rata share of that for a part thereof, completed by the member. The probability of being re-elected has been assumed to be 33%. This implies a probability of 11% to be re-elected twice, 4% to be re-elected three times, etc. b) Post employment benefit: Defined benefit plan Pension fund gratuity (Members)
Political Office Bearer will receive a pension fund benefit upon ceasing to be a political office bearer which is made up of three components:
1. The basic Fund Credit comprising the total ordinary retirement-funding contributions paid by the member or by the employeron her/his behalf (including any transfer value received from another fund), plus net Fund returns.
2. The Additional Service Benefit, of 20% per year of qualifying service (up to a maximum of 10 years) multiplied by the member’s Revalued Pensionable Salary as at date of leaving office. Qualifying service is all contributory service except for service as a diplomat.
3. In the case of a member who has completed more than one full term of office (or more than 5 years in office), the Equalisation Amount which is calculated as the accumulated value of deemed employer contributions of 20% of the member’s pensionable salary over the member’s full period of contributory service (but excluding any service as a diplomat), accumulated with Fund returns, but subject to a maximum of the difference between (a) an amount termed the Maximum Benefit and (b) the sum of (i) the member’s basic Fund Credit, being the accumulated value of the member’s own ordinary contributions (but excluding any such contributions made after completing 15 years of qualifying service) and the State’s ordinary retirementfunding contributions, and (ii) the member’s Additional Service Benefit. The Equalisation Amount has a minimum of zero.
The Maximum Benefit, as referred to above, is defined as the deemed capital value, calculated on a specified actuarial basis, of a pension annuity of 92.5% of the member’s Revalued Pensionable Salary.
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12. Employee benefit obligations (continued)
A member whose period of service is too short to qualify for the Equalisation Amount will instead qualify for a Terminal Gratuity benefit (which may be zero). This is the amount (if any) needed to top the member’s basic Fund Credit plus Additional Service Benefit up to a total of 45% of the member’s annual pensionable salary (as actually earned at the date of exit) for each year of qualifying service, pro-rated for fractions of a year. Again, service as a diplomat is excluded.
Prior to 29 February 2016 this entire benefit was met from the Political Office-Bearers Pension Fund. Following the changes to the Pension Fund Rules, on 29 February 2016, the value of the member’s Additional Service Benefit, Equalisation Amount and Terminal Gratuity (as outlined above) were crystallised in the Fund at the lesser of the immediate value of these benefits as at 29 February 2016 and the discounted value of their expected amounts as at 30 June 2019 (i.e. the deemed date of the next elec- tion). Within the Fund these crystallised amounts are now pure defined contribution benefits (Fund Credits), increasing with Fund returns and further retirement-funding contributions for periods after 1 March 2016. Upon the earlier of the date of leaving office or 30 June 2019 (or the date of the next National Election if different), the amount held in the Fund (the Fund Credit) will be com- pared with the benefit that that the member would have received if the Rules had not been amended (as described above). If the Fund Credit is lower than the “old rules” benefit, then a gratuity will be payable outside of the Fund to compensate the member for the loss of Fund benefit(s) up to the member’s date of leaving (or the election date, if earlier). This report outlines the cost of the gratuity payable outside of the Fund.
After the next election date, the gratuity amount due in respect of a member who return after the election is increased with price inflation and will ultimately be paid out upon the member’s date of ceasing to be a political office bearer.
Overview Long service awards accrued liability (Employees) As at 31 March 2020, the total employer’s accrued liability is R1,626,873. The total expense for 2019/20 was R(83,016). The total recognised accrued liability as at 31 March 2020 is therefore R1,626,873. The total projected expense for 2020/21 is R323,177.
Exit gratuity accrued liability (Members) As at 31 March 2020, the total employer’s accrued liability is R1,381,155. The total expense for 2019/20 was (R1,644,0179). The total recognised accrued liability as at 31 March 2020 is therefore R1,381,155. The total projected expense for 2020/21 is R865,618.
Pension fund gratuity (Members) As at 31 March 2020, the total employer’s accrued liability is R12,455,000. The total expense for 2019/20 was (R2,490,000). The total recognised accrued liability as at 31 March 2020 is therefore R12,455,000. The total projected expense for 2020/21 is R8,576,000
The total employee benefit obligations recognised in the statement of financial position are as follows:
Carrying value Present value of the defined benefit obligation-wholly unfunded (15 463 028) (19 680 123) Present value of the defined benefit obligation-partly or wholly funded - -
Present value of unfunded obligations (15 463 028) (19 680 123) Non-current liabilities (7 014 522) (19 512 790) Current liabilities (8 448 506) (167 333) (15 463 028) (19 680 123)
COVID-19 123 PRACTICE GOOD HYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Notes to the Financial Statements Figures in Rand 2020 2019
12. Employee benefit obligations (continued)
Changes in the present value of the total long term employee benefit obligations are as follows: Opening balance 19 680 123 14 496 607 Benefits paid (167 333) (384 758) Net transfer between divisions (2 388 000) 1 371 000 Actuarial (gain) / loss (4 959 892) (866 643) Net expense recognised in the statement of financial performance 3 298 130 5 063 917 15 463 028 19 680 123
Net expense recognised in the statement of financial performance Current service cost (included under employee related costs) 1 824 287 3 757 426 Interest cost (included under finance cost) 1 473 843 1 306 491 3 298 130 5 063 917
Calculation of actuarial gains and losses Discount rate changes (171 072) (204 790) Changes in the participants to the entitled to the benefits (112 259) (15 920) Miscellaneous (1 207 523) (797 585) Actuarial (gain) and losses due to experience (1 431 000) 1 471 000 Actuarial (gain) and losses due to assumptions (14 000) (765 000) Staff changes (1 795 287) (855 915) Increase in salaries (228 751) 301 567 (4 959 892) (866 643)
Key assumptions used
The following main assumptions were used in valuing the obligation at the reporting date: Long service awards accrued liability (Employees) Discount rates used 10.68 % 8.95 % Consumer price index 5.62 % 5.52 % Net discount rate 4.79 % 3.25 % Exit gratuity accrued liability (Members) Discount rated used 6.89 % 7.91 % Medical cost trend rates 4.22 % 4.67 % Expected increase in salaries 5.22 % 5.67 % Net discount rate 1.59 % 2.12 % Pension fund gratuity accrued liability (Members) Discount rates used 8.80 % 8.50 % Asset returns 8.80 % 8.50 % Price inflation 4.80 % 4.60 % Salary inflation 4.80 % 4.60 %
Basis of assumptions: Long service award and exit gratuity benefit
Due to guidance received from the auditing profession, the methodology of setting the financial assumptions has been updated to be more duration specific. At the previous valuation date, 31 March 2019 the duration of liabilities was 6.77 years (long service award) and 2.05 years (exit gratuity benefit). At this duration the discount rate determined by using the Bond Exchange Zero Coupon Yield Curve as at 31 March 2020 is 10.68% (long service award) and 6.89% (exit gratuity benefit) per annum. The assumed discount rate used at the previous valuation, 31 March 2019, was 8.95% per annum (long service award).
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12. Employee benefit obligations (continued)
As mentioned in the paragraph above, the duration of liabilities was estimated to be 6.77 years (long service award) and 2.05 years (exit gratuity benefit) at the previous valuation date of 31 March 2019. At 31 March 2020 the yield on inflation-linked bonds of a simi- lar term was about 4.79% (long service award) and 2.56% (exit gratuity benefit) per annum. This implies an underlying expectation of inflation of 5.62% per annum ([1 + 10.68%] / [1 + 4.79%] - 1) (long service award) and 4.22% per annum ([1 + 6.89%] / [1 + 2.56%] - 1) (exit gratuity benefit).
The CPI was used to determine the level of salary inflation of 5.22%, which was at a 1.0% premium to the CPI (exit gratuity benefit).
However, it is the relative levels of the discount rate and CPI, to one another that are important, rather than the nominal values. We have thus assumed a net discount factor of 4.79% per annum ([1 + 10.68%] / [1 + 5.62%] - 1) (long service award) and 1.59% per annum ([1 + 6.89%] / [1 + 5.22%] - 1) (exit gratuity benefit).
Basis of assumptions: Pension fund gratuity benefit.
Discount rate:
The discount rate of 8.8% proposed for this year end has been set with reference to the yields obtained from the zero coupon yield curve published by the Johannesburg Stock Exchange at 31 March 2020 at a duration of 4 years.
The discount rate of 8.5% proposed for the 2019 year end has been set with reference to the yields obtained from the zero coupon yield curve published by the Johannesburg Stock Exchange at 31 March 2019 at points which would best match the term of the liabilities, 6 years.
Due to the “better of” nature of the arrangement, the duration was previously more volatile than that which would normally be ob- served for a standard gratuity arrangement. As a result of the crystallisation of the benefit at the election date, we would expect the duration of the liability move in a consistent manner going forwards.
Asset returns: We have assumed that members’ Fund Credits grow in line with the discount rate used above. We would note that since the benefit is crystallised, this is no longer used.
Price inflation rate: We propose future inflation rates of 4.8% per annum for current year end. This is calculated from the difference between the yield obtained from the zero coupon yield curve published by the Johannesburg Stock Exchange and the yield obtain- able on the real yield curve constructed from the available data for inflation linked bonds at points corresponding to that used in cal- culation of the discount rate. In the derivation of the proposed inflation rates allowance was made for a 0.5% inflation risk premium.
Salary inflation: It has been assumed that salary increases for North West Provincial Legislature members would increase in line with price inflation.
An allowance of 5% per annum is made for members claiming the Gratuity each year with members remaining at the 30 June 2024 election being paid out their full Gratuity. Thereafter, no further gratuity payment is assumed to be payable to members.
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12. Employee benefit obligations (continued)
Demographic assumptions
Long service awards accrued liability (Employees):
The following demographic assumptions were applicable over the prior and current valuation periods:
Mortality SA85-90 Normal retirement age 63
Amounts for the current and previous four years are as follows: Example at stated Female rates Male rates age Withdrawal from service 20 24 16 % Withdrawal from service 30 15 % 10 % Withdrawal from service 40 6 % 6 % Withdrawal from service 50 2 % 2 % Withdrawal from service 55 1 % 1 % Withdrawal from service 60 - % - %
Effect of mortality on the obligation for long service awards and gratuity benefits
The table that follows shows the impact of a change in the mortality assumption from SA85-90 to SA85-90 -2, i.e. a two-year adjust- ment.
31 March 2020 *Mortality basis Valuation basis-2 Employer's accrued liability 3 008 028 3 024 385 Employer's expense cost 1 093 633 1 096 933
* Mortality Basis -2 (with a two-year age adjustment) means that, to each beneficiary we assigned a mortality rate of an individual two years younger than that beneficiary. The resulting mortality implies that the individual lives longer than expected in the valuation basis.
The above table highlights the effects of a two-year adjustment to the mortality assumption as at 31 March 2020. The adjustment would result in a 0.61% increase in the long service awards accrued liability and 0.47% increase in the gratuity accrued liability.
Effect of discount rate assumption on the long service award liability (Employees)
The future cashflows emanating from bonuses earned on accrued service are discounted back to present value via the duration specific discount rate. The current discount rate assumption, which forms part of the valuation basis, was 10.68%. The effect of a one percent increase and decrease in the discount rate is as follows: One 31 March 2020 One percentage Valuation basis percentage point point decrease increase Employer's accrued liability 1 732 239 1 626 873 1 532 257 Employer's service cost 166 667 155 958 146 383 Employer's interest cost 161 731 167 219 171 861 The above table illustrates that for the 31 March 2020 financial year, a 1% increase in the discount rate assumption will result in roughly a 5.82% decrease in the accrued liability. Similarly, a 1% decrease in the discount rate assumption will result in roughly a 6.48% increase in the accrued liability.
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12. Employee benefit obligations (continued)
Effect of salary inflation on the exit gratuity payable (Members)
The valuation bases assume that the salary inflation rate (which manifests itself as the annual increase in employees’ salaries which determine the Gratuity payable) will be 2.12% less than the corresponding discount rate, in the long term. The effect of a one percent increase and decrease in the salary inflation rates is as follows: One 31 March 2020 One percentage Valuation basis percentage point point decrease increase Employer's accrued liability 1 344 818 1 381 155 1 422 842 Employer's expense cost 728 383 770 456 818 563
The above table illustrates that for the 31 March 2020 financial year, a 1% increase in the salary cost inflation assumption will result in roughly a 3.01% increase in the accrued liability. Similarly, a 1% decrease in the salary inflation assumption will result in roughly a 2.63% decrease in the accrued liability.
Effect of discount rate assumption on pension fund gratuity liability
The effect of a one percent increase and decrease in the discount rate is as follows: One 31 March 2020 One percentage Valuation basis percentage point point decrease increase Effect on the aggregate of the service cost and interest cost 12 579 550 12 455 000 12 330 450 - - -
The amounts for the current and previous three years were as follows. 2020 2019 2018 2017 Defined benefit obligation 15 463 028 19 680 123 14 496 607 11 366 528
13. Interest income Interest income Bank 2 404 163 1 855 773
14. Revenue Commissions received 96 259 94 074 Interest income 2 404 163 1 855 773 Donated funds (SETA) 840 000 - Appropriation 500 301 000 540 799 000 503 641 422 542 748 847
The amount included in revenue arising from exchanges of goods or services are as follows: Commissions received 96 259 94 074 Interest income 2 404 163 1 855 773 2 500 422 1 949 847
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14. Revenue (continued)
The amount included in revenue arising from non-exchange transactions is as follows: Other revenue Donated funds (SETA) 840 000 - Transfer revenue Appropriation 500 301 000 540 799 000 500 301 000 540 799 000
15. Appropriation
Operating grants Annual appropriation 457 907 000 532 048 000 Statutory appropriation 44 837 000 31 155 000 Less: Unfunded portion - (22 404 000) Less: Overpayment from Provincial Revenue Fund (2 403 000) - Less: Public Works Debt repayment (40 000) - 500 301 000 540 799 000
Annual appropriation
Included in above are the following appropriation received: Final appropriation: Administration Programme 284 379 000 356 589 000 Final appropriation: Legislative Operations Programme 173 528 000 175 459 000 Actual funds received (457 907 000) (509 644 000) - 22 404 000
Statutory appropriation
Member's Remuneration 44 837 000 31 155 000 Actual statutory Appropriation received (44 837 000) (31 155 000) Funds not requested/not received - -
The total Appropriation for the NWPL for the 2019/20 period amounted to R502 744 000 of which R500 341 000 is funded (made up of R455 504 000 of the Annual appropriation and R44 837 000 of Statutory funds) and the balance of R2 403 000 is unfunded.
The difference between the Appropriation per the Statement of Comprehensive Income of R500 301 000 and per the Appropriation note R500 341 000 is R40 000,00 which relates to amounts that was moved from the North West Department of Public Works and Road’s Appropriation to the NWPL’S Appropriation in respect of maintenance projects that were previously undertaken by the NWPL on behalf of the North West Department of Public Works and Road and has been written off against receivables.
Actual funds received: As at 31 March 2020 a total amount of R502 744 000 was received which was inclusive of the funded and unfunded portion and is made up of R457 865 000 of the Annual appropriation and R44 837 000 of Statutory funds.
Unfunded Portion: The unfunded portion of R2 403 000 is made up of R1 563 000 which the Provincial Legislature is expected to fund from its own revenue derived from investing activities (interest) and the remaining R840 000 was funded by PSETA for learnership programmes. However, during the period under review the NWPL received the R2 403 000 which was supposed to be unfunded as part of their Appropriation and thus was overpaid from the Provincial Revenue Fund by a total amount of R2 403 000.
A payable has been raised in this regard and the NWPL will refund the Provincial Revenue Fund a total amount of R2 403 000
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16. Remuneration cost
Remuneration of members 32 888 677 33 446 458 Remuneration of staff 175 696 922 161 285 670 208 585 599 194 732 128
Remuneration of members
13th Cheque 65 705 353 991 Basic earnings 28 840 014 22 469 636 Car allowance 139 495 580 000 Group life insurance 453 920 - Medical aid company contributions 1 678 018 1 481 767 Pension contributions 3 845 525 3 827 901 Employee benefit obligation (2 134 000) 4 733 163 32 888 677 33 446 457
Remuneration of staff
13th Cheque 9 328 900 8 697 835 Leave pay provision charge 2 994 160 2 632 857 Bonus 5 181 155 4 101 621 Overtime payments 196 112 15 647 Basic earnings 114 263 865 107 403 513 Acting allowance 932 261 686 152 Uniform allowance 13 990 44 020 Housing benefit allowance 7 713 657 6 736 618 Car allowance 7 051 157 5 930 200 Unemployment Insurance Fund 382 565 381 913 Group life insurance 2 682 622 3 067 965 Medical aid company contributions 10 114 824 9 364 033 Pension contributions 13 438 699 12 212 791 Employee benefit obligation 1 402 954 10 505 175 696 922 161 285 670
The Government Employees Pension Fund (GEPF)
Contribution to the GEPF for the reporting period 13 438 699 12 212 791
Contributions to pension funds
Retirement benefits are provided by membership of the Government Employees Pension Fund which is a defined benefit fund. The North West Provincial Legislature’s responsibility regarding the funding of the shortfall of the pension fund is limited to the current contributions made on behalf of its employees. The obligation of the fund is guaranteed by the National Revenue Fund and not by the individual government departments and entities. This responsibility is governed by the Government Employees Pension Law, Proclamation 21 of 1996.
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16. Remuneration cost (continued)
The Political Office Bearers Pension Fund (POBF)
Contribution to the POBF for the reporting period 3 845 525 3 827 901
Contributions to pension funds
The Political Office Bearers Pension Fund has a defined contribution and a defined benefit section in terms of which the basis of funding of retirement benefits is on a defined benefit basis through additional service and equalisation benefits provided by Nation- al Treasury, and on a defined contribution basis through the utilisation of the member credits accumulated. This responsibility is governed by the Members of Parliament and Political Office Bearers Pension Scheme Act, 1984 (Act No. 112 of 1984) as ammended in 1992. The North West Provincial Legislature’s responsibility regarding the funding of the shortfall of the pension fund is limited to the current contributions made on behalf of its employees.
17. Donations
Donations - 129 800 - 129 800
Donations were made to the late Hon. Duma’s family to cover his funeral expenditure (refer to related party note).
18. Finance costs
Finance cost 485 495 371 029 Employee benefit interest cost 1 473 843 1 306 491 1 959 338 1 677 520
19. Transfers and subsidies
Research allowance 3 960 000 4 680 000 Secretarial allowance 2 915 000 3 250 000 Constituency allowance 20 424 570 20 032 473 Political party funding 11 188 344 24 912 008 38 487 914 52 874 481
Transfers and subsidies relate to non-exchange payments made to Political Parties.
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20. Goods and services
Advertising 5 087 545 3 951 114 Assets expensed 1 174 105 1 036 631 Auditors remuneration 22 4 245 650 4 405 939 Bank charges 116 515 118 697 Catering expense 9 147 669 14 257 773 Committee expenses 1 996 964 2 085 872 Communication expense 4 926 980 5 572 860 Conferences and seminars 1 488 008 485 600 Consulting and professional fees 24 22 558 151 23 190 633 Consumables 513 684 367 153 Entertainment 66 980 124 519 Expenditure incurred to repair and maintain assets 6 891 794 1 471 141 Gifts and promotional 1 982 470 1 367 676 Insurance 113 866 418 664 Learnership & bursaries 2 009 361 836 819 Legal cost 693 651 1 039 342 License fees 705 023 1 861 534 Motor vehicle expenses 2 089 574 1 255 366 Plants and Flowers 10 080 17 290 Postage and courier 650 3 856 Printing and stationery 7 758 974 8 176 989 Professional bodies, membership and subscription fees 997 858 624 962 Rental & hiring expenses 13 075 137 16 288 448 Security services 3 821 601 4 356 026 Staff welfare 122 458 - Training 1 228 045 949 947 Travel and accommodation 46 034 461 55 798 921 Uniforms 330 362 1 169 245 Venues and facilities 155 974 5 357 139 343 590 151 238 374
21. Operating surplus
Operating surplus for the period is stated after accounting for the following:
Profit/(Loss) on sale of property, plant and equipment (117 069) (1 314 776) Amortisation on intangible assets 664 064 682 849 Depreciation on property, plant and equipment 20 564 722 14 137 347 Remuneration costs 208 585 598 194 732 127
22. Auditors’ remuneration
Fees 4 245 650 4 405 939
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23. Cash generated from operations
Surplus 98 879 019 126 828 216 Adjustments for: Depreciation and amortisation 21 228 786 14 820 196 (Gain)/Loss on sale of assets and liabilities 117 069 1 314 776 Finance costs 1 959 338 1 677 520 Interest received basis difference (238 673) 109 294 Movements in employee cost 388 370 8 335 599 Transfers and subsidies (90 000) - Appropriation 2 443 000 - Actuarial gains/losses (4 959 892) (866 643) Commission (96 259) (94 074) Changes in working capital: Receivables from exchange transactions (1 285 425) (953 913) Receivables from non-exchange transactions - 1 092 900 Payables from exchange transactions (3 961 920) (19 359 082) 114 383 413 132 904 789
24. Consulting and professional fees
Financial consulting 17 269 885 12 845 660 Information Systems Consultants 4 084 169 8 059 312 Sign language Interpreters 275 800 185 902 Other consultants 928 296 2 099 759 22 558 150 23 190 633
25. Contingencies
Contingent liabilities
Imbizo Office Furniture (Supplier) has filed a civil action against NWPL in 2014 over an appointment letter issued by the NWPL that was not honoured as a result of a tender process. This case is still active according to court records. The potential cost to the Legis- lature amounts to R14,560,145; 2020 (R14,560,145; 2019).
Atlantis has filed a civil action against NWPL for the payment of invoices allegedly not honoured by the Legislature during the tenure of the travel and accommodation contract between the two parties. The case has been resolved and the NWPL has paid a settle- ment of R580 090 to Atlantis. Estimated amount in the current year R0; 2020 (R580 090; 2019)
Nature of contingent liabilities
Supplier dispute 14 560 145 15 140 235
Contingent assets
The Legislature instituted summons against a member for the recovery of over-expenditure on his private quota. This case was instituted in Mmabatho High Court and the case is pending.
Nature of contingent asset
Staff labour dispute 131 516 131 516
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26. Related parties
Relationships Custodian of public resources The North West Provincial Treasury Registered owner of the legislature buildings and precinct North West Department of Public Works and Roads Close family member of key management None Members of key management Speaker of the Legislature Hon SR Dantjie Deputy Speaker Hon J Manganye (end of term 7 May 2019) Deputy Speaker Hon Motsumi Secretary of the Legislature Mr OS Mosiane Deputy Secretary of the Legislature (Admin) Ms M Maleme Chief Financial Officer Mr T Lehutso Acting Manager: Legal Mr M Matli (resigned 31 January 2020) Executive Manager: Corporate Services Mr AJ Maphetle Executive Manager: Policy, Research & Committees Mrs TC Mbedzi (contract ended 30 November 2019) Executive Manager: Public Participation and Petitions Mr JK Mashori (contract ended 31 December 2019) Executive Manager: Speaker's Office Mr TE Chaane Executive Manager: Infrastructure Mr MP Malgas (contract ended 31 March 2020) Executive Manager: Parliamentary Services Ms A Diutlwileng
Emoluments of key managament have been disclosed in note 28.
The members and executives of the North West Provincial Legislature are disclosed in the Accounting Officer’s report, item 9.
Related party balances
Amounts included in Trade receivable (Trade Payable) regarding related parties Other receivables from exchange transactions 656 111 592 325 Payables from non-exchange transactions (2 403 000) -
Included in other receivables are amounts recoverable from Members due to cell phone use and subsistence and travel expenses. The terms and conditions of the related party balance is interest free, unsecured and the repayment terms is per the discretion of management.
Included in Payables from non-exchange transactions is a deposit incorrectly paid from the Provincial Revenue fund.
Related party transactions
Revenue received from related parties North West Provincial Treasury 500 301 000 540 799 000
Payments to related parties Hon Mahlakeng 923 311 1 965 941 Hon Moiloa 205 787 1 558 956 Hon Duma - 866 846 Hon Diale 1 204 564 1 251 921 Hon Schutte 397 467 1 392 823 Hon Motswenyane 576 099 1 167 609 Hon Theologo 1 178 655 1 176 337 Hon Botswe 1 261 654 - Hon Faleni 339 723 1 164 049 Hon Motsi 327 693 1 173 675 Hon McGluwa - 533 198 Hon Sehloho 111 001 1 137 541 Hon Mosala 398 039 1 382 041 Hon Ntshangani 114 914 1 141 568 Hon Matsemela - 1 123 861 COVID-19 133 PRACTICE GOOD HYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Notes to the Financial Statements Figures in Rand 2020 2019
26. Related parties (continued) Hon Molapisi - 1 039 817 Hon Maluleke 661 686 395 016 Hon Tlhapi 205 787 1 425 232 Hon Sambatha - 1 064 629 Hon Babuile 1 339 701 1 220 138 Hon Mahumapelo - 111 573 Hon Visser 111 344 718 403 Hon Elisha 733 412 1 532 625 Hon Rosho - 1 064 095 Hon Galeng 659 678 394 830 Hon Tlhape 136 102 397 167 Hon Masike 558 457 396 125 Hon Cwaile 1 449 213 197 089 Hon Dikolomela 1 042 529 - Hon Dliso 1 348 241 - Hon Edwards 1 048 442 - Hon Kegakilwe 70 105 - Hon Kerileng 1 069 776 - Hon Kleynhans 1 103 704 - Hon Lenkopane 1 260 122 - Hon Mataboge 1 267 233 - Hon Medupe 1 318 901 - Hon Motswana 1 213 104 - Hon Mosenogi 70 105 - Hon Nel 1 303 615 - Hon Rabotapi 1 211 030 - Hon Sebegoe 1 432 424 - Hon Sonakile 1 189 306 - Hon Williams 1 272 108 - Hon Xaba 1 019 024 -
Donations paid to related parties Donations paid - 129 800
North West Provincial Revenue Fund
2020 •Revenue received relates to the annual appropriation received from Provincial Revenue Fund in the normal course of business.
2019 •Revenue received relates to the annual appropriation received from Provincial Revenue Fund in the normal course of business. •Donations paid consist of an amount of R129 800 which was for the funeral of late Hon. Duma.
No bad debt expenses have been recognised or provision for bad debt accounted for regarding related parties.
27. Services in kind
South African Police Service (SAPS) North West Provincial Legislature receives services relating to the safeguarding of the building from SAPS at no cost to the Legisla- ture.
North West Department of Public Works and Roads North West Provincial Legislature occupies a building owned by the North West Department of Public Works and Roads. No rental or utilities are being paid by the North West Provincial Legislature.
North West Provincial Legislature was not able to determine the above service in kind at year end, as the calculation thereof was impractical. Currently no active market exist to determine the market value of the service in kind
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PRACTICE GOODHYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION Financial Statements for the year ended 31 March 2020 ANNUAL COVID-19 REPORT Notes to the Financial Statements Figures in Rand
28. Management emoluments Executive
2020 Basic 13th cheque/ Pension fund- Medical Contribu- Contribution Unemploy- Total salary Performance contribution: aid tion Old Mutual ment bonus contribution to Insurance bargaining Fund (UIF) council Speaker of the Legislature 1 572 314 - 262 726 108 971 - 33 832 - 1 977 843 Deputy Speaker 138 192 - 22 898 8 528 - 2 420 - 172 038 Deputy Speaker 1 144 834 - 191 522 82 323 - 24 418 - 1 443 097 Secretary of the Legislature 2 247 524 290 619 185 335 71 971 54 32 607 1 785 2 829 895 Deputy Secretary 89 551 51 422 - - - - - 140 973 2nd Deputy Secretary of the Legislature 1 664 059 87 205 150 541 46 365 54 25 910 1 785 1 975 919 Manager: Legal (Acting) 1 081 119 193 322 114 658 37 345 - 23 744 1 487 1 451 675
135 Executive Manager: Corporate Services 877 679 49 181 75 472 48 004 23 15 703 1 190 1 067 252 Executive Manager: Policy, Research Acting 930 066 116 199 78 920 54 416 36 16 884 1 190 1 197 711 Executive Manager: Parliamentary Services 1 279 237 73 658 116 632 30 152 54 20 520 1 785 1 522 038 Executive Manager: Speaker's Office 1 408 823 137 421 95 253 - 54 20 444 1 785 1 663 780 Executive Manager: Infrastructure 1 243 702 144 476 118 381 80 573 54 25 408 1 785 1 614 379 Executive Manager: Chief Financial Officer 1 313 608 73 658 116 632 - 54 25 032 1 785 1 530 769 Executive Manager: Public, Participation & Petitions 1 045 760 128 882 88 785 34 327 41 19 086 1 338 1 318 219 16 036 468 1 346 043 1 617 755 602 975 424 286 008 15 915 19 905 588 2019/20
PRACTICE GOODHYGIENE; STAY SAFE North West Provincial Legislature PART E: FINANCIAL INFORMATION Financial Statements for the year ended 31 March 2020 ANNUAL COVID-19 REPORT Notes to the Financial Statements Figures in Rand
28. Management emoluments (continued)
Executive
2019 Basic 13th cheque/ Pension fund- Medical Contribu- Contribution Unemploy- Total salary Performance contribution: aid tion Old Mutual ment bonus contribution to Insurance bargaining Fund (UIF) council Speaker of the Legislature 1 610 483 - 267 002 98 296 - 34 817 - 2 010 598 Deputy Speaker 1 388 155 - 224 163 48 149 - 22 951 - 1 683 418 Secretary of the Legislature (appointed) 2 021 519 107 383 167 519 65 359 54 31 206 1 785 2 394 825 Deputy Secretary of the Legislature (Admin) 1 509 455 88 533 138 111 51 942 54 30 594 1 785 1 820 474 Deputy Secretary of the Legislature (Core) 1 440 627 83 414 132 077 41 525 54 24 604 1 785 1 724 086 Manager: Legal (Acting) 1 100 932 76 805 119 816 41 686 - 26 433 1 785 1 367 457 Executive Manager: Corporate Services 1 165 494 69 619 108 606 58 107 54 24 358 1 785 1 428 023
136 Executive Manager: Policy, Research & Committees 1 170 013 68 591 108 606 76 596 54 24 358 1 785 1 450 003 Executive Manager: Parliamentary Services 1 165 730 67 577 105 420 27 898 54 19 638 1 785 1 388 102 Executive Manager: Speaker's Office 1 398 365 70 669 79 054 - 40 21 051 1 785 1 570 964 Executive Manager: Infrastructure 1 129 951 68 591 107 001 66 693 54 23 998 1 785 1 398 073 Executive Manager: Chief Financial Officer 1 186 081 67 577 105 420 - 54 23 643 1 785 1 384 560 Executive Manager: Public, Participation & Petitions 1 181 451 68 591 108 606 48 770 54 24 358 1 785 1 433 615 17 468 256 837 350 1 771 401 625 021 526 332 009 19 635 21 054 198
North West Provincial Legislature PART E: FINANCIAL INFORMATION 2019/20 Financial Statements for the year ended 31 March 2020 ANNUAL REPORT Notes to the Financial Statements
29. Commitments
Authorised capital expenditure
2020 2019 Already contracted for Within 1 Within 2 - 5 years Within 1 year Within 2 - 5 year years • Legislature Chamber 5 843 814 8 824 620 35 459 501 11 624 074
Total capital commitments Already contracted for 5 843 814 8 824 620 35 459 501 11 624 074 Total commitments
Total commitments Authorised capital expenditure 5 843 814 8 824 620 35 459 501 11 624 074
The commitments relate to the refurbishment of the North West Provincial Legislature Chamber, which is expected to be completed during the 2021/22 financial year.
30. Prior period errors
Members remuneration
1) Members salaries payables were incorrectly netted off thus instead of raising a payable of R41 796 only R26 785 was raised and as a result the amount payable was understated by R15 010 in the 2018/19 period.
2) An amount of R21 004 was recovered from an employee’s salary on the 16th of March 2018 and a further R21 004 was recovered on the 16th of August 2018 thus the total debt repayment amounted to R42 009 however his debt was only reduced by R21 004. Members remuneration was understated by R21 004 and receivables was overstated by R21 004 in the 2018/19 period.
3) During the prior year an amount of R218 112 was receivable from Old Mutual for an employee who was on incapacity leave. This was not accounted for and employee cost was overstated and receivables was understated by R218 112
4) As of May 2016 to May 2019 Mr Ntsangani was appointed as the Chief Whip of the EFF but was paid at an incorrect Notch. As a result he was underpaid by R332 081 from the period May 2016 to 31 March 2019.
Management emoluments 5) The management emoluments disclosure relating to 2019 was corrected resulting in a net effect of R91 993.
Related parties 6) Included in the related party disclosure note is Other receivables recoverable from Members due to cell phone use and subsistence and travel expenses. This amount was understated with R249 599 in the prior year.
Fruitless & wasteful expenditure 7) During the 2017/18 period fruitless and wasteful expenditure incurred for traffic fines, cancellations and repairs was understated by R1 386 and R361 in the 2018/19 period.
Unauthorised Expenditure 8) During the 2015/16 period the definition of unauthorised expenditure was not applied as per legislation, as a result unauthorised expenditure was overstated by R9 023 133. The correction of the error(s) results in adjustments as follows:
Statement of financial position and financial performance Receivable from exchange transaction - 197 107 Payables from exchange transactions - (347 093) Remuneration - 149 986
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30. Prior period errors (continued)
Disclosure of financial statement Related party: Other receivables - 249 599 Fruitless & wasteful expenditure - 1 746 Unauthorised expenditure - (9 023 133) Management emoluments - 91 993
31. Fruitless and wasteful expenditure
Opening balance 850 435 737 550 Add : Public Investment Corporation Interest 4 709 - Add: AGSA interest 6 937 32 389 Add: Traffic fines, cancellations and repair charges 80 312 150 532 Add: Interest Atlantis Corporate 379 478 - Less: Interest written off by the AGSA (prior years) (33 227) - Less: AGSA Interest written off/acknowledged as debt (6 937) - Less: Credit notes received - (70 036) Less: Debt acknowledged and recovered (87 074) - Less: PIC Interest Acknowledged as debt (4 709) - Less: Repair charges debt acknowledged (38 229) - 1 151 695 850 435
In the current year AGSA wrote-off interest accrued in the prior year amounting to R34 733. The R34 733 consists of R32 388 that was incurred in the 2018/19 period, R1 506 that was acknowledged as debt and not raised as fruitless and wasteful expenditure as well as R850 which was incurred in periods prior to that hence only the R33 227 that was previously raised has been reversed. The AGSA has written off a further R4 191 of the R6 937 interest that was incurred in the current year.
During the period under review debts for fruitless and wasteful expenditure was acknowledged and paid by members. A total amount of R87 074 was recovered. Furthermore, Fruitless and wasteful expenditure incurred for repairs of R38 229, AGSA interest of R2 746 and PIC Interest of R4 709 was acknowledged and a debtor has been raised.
32. Irregular expenditure
Opening balance 310 086 615 274 356 836 Add: Irregular Expenditure - current year 40 688 397 42 944 875 Less: Adjustment (2 779 118) (7 215 096) 347 995 894 310 086 615
Analysis of expenditure awaiting condonation per age classification
Current year 40 688 397 42 944 875 Prior years 307 307 497 267 141 740 347 995 894 310 086 615
Details of irregular expenditure
Disciplinary steps taken/criminal proceedings Irregular expenses Amounts under investigation but not finalised 18 034 834 10 191 033 Irregular contracts Amounts under investigation but not finalised 328 597 630 290 715 176 Irregular expenses Amounts not investigated - 7 816 976 Travel card fraud Amounts under investigation but not finalised 1 363 430 1 363 430 347 995 894 310 086 615 Irregular expenditure of R40 688 397 was incurred during the current year. Approximately R32 million relates to the construction of the Chamber. NWPL has investigated and condoned R7 215 096 in the prior year. Management has adjusted the prior year’s irregu- lar expenditure by R2 779 118 and is currently investigating the current and remaining prior year irregular expenses for condonation.
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33. Unauthorised expenditure
Unauthorised expenditure 18 743 000 5 785 000 Current year - 12 958 000 18 743 000 18 743 000
The unauthorised expenditure has been investigated and submitted to Provincial Treasury for condonation at 31 March 2020 these expenditure has not yet been approved. The total amount of R18 743 000 is awaiting condonation.
34. Budget differences
Material differences between budget and actual amounts
The budget is approved on a cash basis by functional classification. The Approved budget covers the period from 1 April 2019 to 31 March 2020. The budget and accounting basis differ. The financial statements are prepared on the accrual basis using a classifica- tion on the nature of expenses in the statement of financial performance.
The amounts in the financial statements were reconciled from the accrual basis to the cash basis and reclassified by functional classification to be on the jsame basis as the final approved budget. A reconciliation between the actual amounts on a compara- ble basis as well as the amounts of these adjustments are identified and presented in the statement of comparison of budget and actual amounts and the actual amounts in the cashflow statement for the period 31 March 2020. The financial statements and the budget documents are thus not prepared for the same period. Furthermore, there is a basis difference: the budget is prepared on a cash basis and the financial statements are prepared on the accrual basis.
34.1 Interest received was under budgeted for as it is derived based on funds available in the bank account and thus the budgeted amount was only a rough estimate.
34.2 The total Appropriation for the NWPL for the 2019/20 period amounted to R502 744 000 of which R500 341 000 is funded (made up of R455 504 000 of the Annual appropriation and R44 837 000 of Statutory funds) and the balance of R2 403 000 is unfunded.
The difference between the Appropriation per the Statement of Comprehensive Income of R500 301 000 and per the Appropriation note R500 341 000 is R40 000,00 which relates to amounts that was moved from the North West Department of Public Works and Road’s Appropriation to the NWPL’S Appropriation in respect of maintenance projects that were previously undertaken by the NWPL on behalf of the North West Department of Public Works and Road and has been written off against receivables.
Actual funds received:
As at 31 March 2020 a total amount of R502 744 000 was received which was inclusive of the funded and unfunded portion and is made up of R457 865 000 of the Annual appropriation and R44 837 000 of Statutory funds.
The unfunded portion of R2 403 000 is made up of R1 563 000 which the Provincial Legislature is expected to fund from its own revenue derived from financing activities (interest) and the remaining R840 000 was funded by PSETA for learnership programmes. However, during the period under review the NWPL received the R2 403 000 which was supposed to be unfunded as part of their Appropriation and thus was overpaid by the Provincial Revenue Fund by a total amount of R2 403 000.
A payable has been raised in this regard and the NWPL will refund Provincial Revenue Fund a total amount of R2 403 000.
34.3 Remuneration Cost
Contingency measures were put in place whereby, the bargaining/negotiation team had to ensure the annual salary increment does not exceed the previous year’s increment of 10 per cent in order to ensure that the expenditure is contained. The annual increase was therefore brought to 9 per cent for both management and staff.
34.4 Transfers and Subsidies
Following the submission from the office of the Chief Whip of the House, it was anticipated that the Speaker may approve an increase on the transfers to in respect of Political Party Funding to cater for an increase on salaries of the staff in the Chief Whip’s Office.
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34. Budget differences (continued)
34.5 Goods and services
In terms of Goods and services, the underspending is mainly linked to activities that could not be performed during the 1st and the 2nd quarter due to the transition from the 5th to the 6th administration. The underspending was further affected during the 4th quarter whereby 7 public participation programmes had to be cancelled as a result of the COVID-19 restrictions. NB: The Legislature sanctioned restrictions prior to the commencement of the nationwide Lockdown.
34.6 During the period under review, expenditure was incurred for assets that were acquired which included computer equipment and audio and visual equipment and well as expenditure incurred on the refurbishment of the Chamber. The allocation for the Chamber project is R64.8 million and the NKP project is allocated R10 million.
The NKP project registered a nil expenditure as the Legislature could only appoint a consultant for the project.
The expenditure on the Chamber relates to pre-tender activities which includes but not limited to architectural work as well as quantity surveyor services. The expenditure relating to the actual construction did not commence due to the cancellation of a bid (to appoint a contractor) after interruptions of the compulsory tender briefing by the members of the community.
35. Risk management
Financial risk management
Due to the largely non-trading nature of the activities and the way in which it is financed, the legislature is not exposed to the same degree of financial risk faced by business entities.
The Legislature recognises the need to implement Risk Management. The Accounting Officer accordingly maintains effective, efficient and transparent systems of risk management and internal control. Risk management is an integral part of the institution’s activities to reduce risks to acceptable levels. Continued integration of risk management into key decision-making processes of the organisation was also achieved with the explicit inclusion of risk management principles into the department’s strategic and busi- ness planning processes.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and thevailability a of funding through an adequate amount of committed credit facilities.
The Legislature’s risk to liquidity is a result of the funds available to cover future commitments. The Legislature manages liquidity risk through an ongoing review of future commitments and credit facilities.
The table below analyses the Legislature’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
At 31 March 2020 Less than 1 Between 1 Between 2 Over 5 year and 2 years and 5 years years Payables from exchange transactions 26 519 498 - - - Payables from non-exchange transactions 2 403 000 - - -
At 30 March 2019 Less than 1 Between 1 Between 2 Over 5 year and 2 years and 5 years years Payables from exchange transactions 29 790 732 - - -
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35. Risk management (continued)
Credit risk
Credit risk consists mainly of cash and cash equivalents and trade receivables from exchange - and non-exchange transactions. The entity only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.
Refer to note 5 in Cash and cash equivalents for the total facilities of credit cards with their respective limits.
Financial assets exposed to credit risk at year end were as follows: Financial instrument 2020 2019 Cash & cash equivalents 76 820 650 4 979 937 Receivables from exchange transactions 3 578 021 1 959 591 Receivables from non-exchange transactions 2 662 258 2 572 258
Market risk
Interest rate risk
As the Legislature has no significant interest-bearing assets, the Legislature’s income and operating cash flows are substantially independent of changes in market interest rates.
36. Events after the reporting date
The international pandemic, Coronavirus has had a significant impact on Legislature’s programme planned for the first and second quarters of 2020/21. The COVID-19 pandemic has impacted almost every activity within the Legislature, particularly the activities of Public Participation. New risks has emerged and had been assessed to determine an appropriate plan of action to de- liver on its mandate. The pandemic has also led to loss of productivity and additional costs required to manage the human &capital resources of the Legislature.
As at the date of the report, South Africa has not reached its peak of infections a predicted by the experts. It is possible that the pandemic will have far reaching consequences, especially in the coming winter months. Additional measures will have to be put in place to ensure that the Legislature still operate at an optimal level, despite an increase in infections and possible deaths asa results of the virus.
Legislature has performed the following steps to mitigate the risk of infection and deaths in the workplace as follows:
- A COVID-19 risk assessment has been performed
- COVID-19 guideline has been developed
- High risk staff was identified and equipped to work from home, until further notice
- Permits have been issued for staff travelling to and from work
- COVID-19 information posters and leaflets have been printed and distributed
- A timetable has been devised for the phased return to work
- A COVID-19 Compliance Officer and COVID-19 Committee has been appointed
- Reporting template to Department of Health on positive diagnosis of employees
- A register is being utilised to screen employees and visitors
- NWPL will put aside a budget to deal with COVID-19 requirements.
As at the date of this report, North West Provincial Legislature reprioritised budget within the 20/21 baseline allocation and earmarked R5m to fulfill the compliance requirements of the Disaster Management Act 57 of 2002.
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NORTH WEST PROVINCIAL LEGISLATURE
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