Annual Report by Secretary to the Legislature

SUBMISSION OF THE 2015/16 ANNUAL REPORT BY SECRETARY TO THE LEGISLATURE

I am pleased to submit the Annual Report of the Eastern Cape Provincial Legislature, which is in accordance with Section 59 of the Financial Management and Provincial Legislature Act, 2009.

______V. MAPOLISA SECRETARY TO THE LEGISLATURE OFFICIAL SIGN OFF

L FUMBA ACTIG GM: STRATEGY, POLICY, AND M&E ______Signature

MS N DYAN ACTING CHIEF FINANCIAL OFFICER ______Signature

MS N MENE CHIEF PARLIAMENTARY OFFICER ______Signature

ADV. NETSHITUMBU ACTING CHIEF OPERTAING OFFICER ______Signature

MR V MAPOLISA ACCOUNTING OFFICER ______Signature TABLE OF CONTENTS

i. Speaker’s Foreword vi ii. Overview of the Secretary vii

PART A 1. GENERAL INFORMATION 1.1. Strategic Overview 02 1.2. Legislative and other Mandates 03 1.3. Organizational Structure 05 1.4. Overview of the service delivery environment 06 1.5. Departmental revenue 06

PART B 2. INFORMATION ON PREDETERMINED OBJECTIVES 2.1. Strategic Outcome Oriented Goals 08 2.2. Performance Information by Programme 08

2.3. Programme 1 – Administration 09 2.3.1. Office of the Speaker 10 2.3.2. Office of the Secretary 10 2.3.2.1. Office support to the Secretary 10 2.3.2.2. Strategy, Policy, Monitoring and Evaluation 11 2.3.2.3. Employee Relations 12 2.3.2.4. Wellness and Special Programmes 12 2.3.3. Financial Management 13 2.3.3.1. Finance 13 2.3.3.2. Supply Chain Management 14 2.3.3.3. Risk Management 15 2.3.4. Integrated Human Resource Management 15 2.3.4.1. Organisational and Human Resource Development 15 2.3.4.2. Human Resource Management 16 2.3.5. Integrated Information and Technical Service 16 2.3.5.1. Information Technology 16 2.3.5.2. Library and Archive Services 17 2.3.5.3. Safety 17 2.3.5.4. Office Support and Household 18

2.4. Programme 2: Enabling Facilities and Political Parties 19 2.4.1. Enabling Facilities of Members and Political Parties 19

2.5. Programme 3: Parliamentary Services 20 2.5.1. Oversight Services 20 2.5.1.1. Committee Services 20 2.5.1.2. Research 21 2.5.2. Public Participation and Communications 22 2.5.2.1. Public Participation and Petitions 22 2.5.2.2. Communications 23 2.5.3. Law Making 24 2.5.3.1. House Proceedings 24 2.5.3.2. Hansard and Language Services 25 2.5.3.3. NCOP 26 2.5.3.4. International Relations and Ceremonial Services 26 2.5.4. Legal Services 27

PART C 3. GOVERNANCE 3.1. Introduction 30 3.2. Risk Management 37 3.3. Fraud and Corruption 37 3.4. Minimising Conflict of Interest 37 3.5. Code of Conduct 37 3.6. Health, Safety and Environmental Issues 37 3.7. Committees 38 3.7.1. Committee Visits 38 3.8. Prior Modifications to Audit reports 38 3.9. Internal Audit Unit 38 3.10. Audit Committee Report 38 3.10.1. Audit Committee Members and Attendance 38 3.10.2. Audit Committee Responsibility 39 3.10.3. The effectiveness of internal control 39 3.10.4. The quality of in year management and monthly/quarterly reports submitted in terms of the PFMA and the Division of Revenue Act 39 3.10.5. Evaluation of Financial Statements and Annual Performance Report 39 3.10.6. Internal Audit 40 3.10.7. Auditor-General South Africa 40 3.11. Report of the Auditor-General of South Africa 41

PART D 4. HUMAN RESOURCE MANAGEMENT Human Resource Oversight Statistics 46

PART E 5. FINANCIAL INFORMATION 1. Report of the Accounting Officer 71 2. Report of the Auditor General 00 3. Annual Financial Statements 72 PART F 6. INFORMATION FOR POLITICAL PARTIES

1. Report of the African National Congress 140 2. Report of the Democratic Alliance 164 3. Report of the United Democratic Movement 167 4. Report of the Congress of the People 168 5. Report of the AIC 170 SPEAKER’S FOREWORD

I am pleased to present the Annual Report of the Eastern Cape Provincial Legislature for 2015/16 financial year. This report accounts to the people of the Province on the performance of the Legislature against the overall strategic plan. It also bears testimony to our achievements and challenges during the financial year under review.

In the year under review, the process to review the structure of the Legislature was started in order to ensure that it is properly aligned and that core business continues to receive adequate support. The core business of the Legislature was prioritised through public participation programmes which culminated in the hosting of two sectoral parliaments (Youth and Women’s Parliaments) as well as the Taking Legislature to the People. The Public Participation and Petitions Committee also dealt with a number of issues brought to its attention by the citizens. While there is still room to improve the synergy with the implementing institutions and the Legislature, great strides have been made to expedite the process of resolving petitions.

We are pleased that through these activities we have increased our interaction with the people to ensure that they play a central role in legislative process. In doing so, we greatly enhanced public involvement and deepened democracy in all corners of the Province.

Guided by the Sector Oversight Model (SOM), oversight committees began to consider quarterly reports of the Departments in the year under review. This is in line with our strategic objective to fully implement the SOM and to ensure that all its elements are achieved. We have taken bold steps to strengthen and enhance the oversight role in an effort to jealously guard the interests of our people.

In line with improving financial management, we are also pleased to report that we have been operating for the second year under the provisions of the Financial Management of Parliament and Provincial Legislature Act, 2009. Our processes to migrate to the GRAP accounting system are continuing smoothly and the migration has begun in the year under review.

Our achievements from the past year provide us with the confidence that the Legislature is indeed making giant strides to improve the lives of the people we serve.

We present this report as part of the collective effort of Honourable Members, Legislature management and the entire workforce. Let me take this opportunity to thank you for your unwavering support and commitment in the work we do. We are also truly grateful to the people of the province for providing us their support in all our endeavours.

Working together we can do much more.

______

Ms N. KIVIET (MPL) SPEAKER OF THE EC PROVINCIAL LEGISLATURE EXECUTIVE AUTHORITY OVERVIEW BY THE ACCOUNTING OFFICER

The 2015/16 financial year presented challenges and opportunities in the administration of the institution. It was during this period that we ensured the continuation of the sterling work as reported in the 2014/15 financial year. Both from a core business and support perspective we intensified our efforts to give effect to the Legislature’s constitutional mandate.

The implementation of the Financial Management of Parliament and Provincial Legislatures Act, No 10 of 2009 (FMPPLA) and the resultant conversion to the accrual basis of accounting, meant that systems also had to be put in place in order to meet the accountability requirements brought about by the changes.

The declining public purse has posed some serious challenges in ensuring a seamless migration to GRAP as well as discharging the Legislature’s responsibility of ensuring good corporate governance to effectively support its core mandate. Such challenges meant that creating a strong internal control environment had to become more amplified, especially in giving assurance to those charged with oversight over the financial and performance management of the Legislature. Despite the challenges, the Legislature has been able to maintain an effective internal control environment with notable efficiency in implementing its core programmes. As the Legislature, we are bound to conduct our activities in a manner that promotes efficiency and good governance so that the rest of the Provincial Administration may emulate us.

The Legislature has continued to be the voice of the people and all our programmes were geared at ensuring that we remain “A people’s Assembly for Good Governance”. In line with our stated commitment towards good governance, the Legislature has obtained an unqualified audit opinion with matters of emphasis from the Auditor-General.

We will continue to strengthen all necessary controls such as Risk Committee, the Audit Committee and the Internal Audit unit. We are therefore confident that we will achieve an unqualified audit opinion. With the support of our political leadership and commitment from management and staff, I am confident that we will be able to achieve more, in ensuring that the Legislature is the centre of service delivery excellence in the Eastern Cape.

______V MAPOLISA SECRETARY TO THE LEGISLATURE ACCOUNTING OFFICER

1.1 STRATEGIC OVERVIEW:

VISION, MISSION AND VALUES

VISION

‘A People’s Assembly for good governance to realise service excellence’

MISSION STATEMENT

 To conduct oversight that will ensure accountability of the provincial government to the people of the Province;  To pass laws that will ensure that citizens’ right are upheld;  To conduct public outreach and education programmes that will ensure meaningful participation of the public in government programs;  To foster relations with local and international oversight bodies that will ensure sharing knowledge and best practices.

VALUES

Excellence: Discharging our responsibilities with utmost care and offering the highest levels of service to those we serve.

Integrity: Pursuing ethical practices by being open, honest, transparent and consistent in our actions.

Commitment: Focusing on achieving our goals without let or hindrance. Conducting our business with our stakeholders with highest levels of diligence, Professionalism: competence and responsibility.

Accepting full responsibility for our actions or inactions and consequences Accountability: thereof.

Espousing the principles and ethos enshrined in the Constitution of the Loyalty Republic of South Africa.

2 1.2 Legislative and other mandates a. Constitutional Mandate

The Eastern Cape Provincial Legislature derives its mandate from Clause 114 of the Constitution of the Republic of South Africa, 1996. The Section 114 Act enjoins the Legislature:-

(1) in exercising its legislative power, a Provincial Legislature may:

(a) Consider, pass, amend or reject any Bill before the legislature and

(b) Initiate or prepare legislation except for money Bills

(2) A Provincial Legislature must provide mechanisms;

(a) To ensure that all Provincial executive organs of state in the province are accountable to it, and

(b) To maintain oversight of the provincial executive authority in the province, including the implementation of legislation and any provincial organ of state.

Section 118 prescribes that;

(1) A provincial legislature must:

(a) Facilitate public involvement in the legislative and other

(b) Processes of the Legislature and its committees b. Legislative Mandates

In addition to the above, there are various pieces of legislation that govern or have direct bearing on the programmes and activities of the Legislature including:

 Evidence and Information Before the Eastern Cape Provincial Legislature Act, 2007

 Financial Management of Parliament and Provincial Legislature Act

 Remuneration of Public Office Bearers Act, 1997

 Mandating Procedures of Provinces Act, 2008

 Powers, Privileges and Immunities of Parliament and Provincial Legislatures Act, 2004

 Public Finance Management Act, 1999 and the Treasury Regulations enacted in terms thereof

 Basic Conditions of Employment Act, 1997

 Labour Relations Act, 1995

 Employment Equity Act, 1998 c. Policy Mandates

The business and operations of the Legislature are further regulated by a number of policy directives, including (among others):

 Standing Rules of the Eastern Cape Legislature which provide for the powers, duties, functions and procedures of different legislature structures.

3  Ministerial Handbook, adopted by cabinet on February 7, 2007, which provides for office complements and entitlements for the Speaker and Deputy Speaker.

 Rules and Executive Committee Policy pronouncements relating to matters concerning the Legislature.

 Adopted policies of the Legislature including Management and Financial, Supply Chain Management, Integrated Human Resource Management policies and procedures. d. Relevant Court Rulings

The key court ruling regarding the legislative and policy mandate of the legislature are contained in the judgments of the Constitutional Court in:  Doctors for Life International vs Speaker of the National Assembly and others (CCT12/05) [2006] ZACC 11.  Municipality of Matatiele and others vs The President of the Republic of South Africa and others ZACC 12; 2007 (1) BCLR 47 (CC).  Speaker: Limpopo Legislature v Speaker of the National Assembly and 9 others.

e. Planned Policy Initiatives

The Legislature intends to initiate, develop and introduce a Bill on the Procedure to Amend a money Bill as mandated by section 120 (3) of the Constitution of the Republic of South Africa Act, 1996.

Communications and Media Policies were adopted in December 2012 and September 2013 respectively, as a means to ensure proactive and appropriate communication with the public. Part of the work planned for the Fifth Term is the development of a guiding framework for planning and reporting as well as a protocol for Management manual. The Legislative Sector has just adopted a sector-wide Public Participation Framework. We will customise this framework and develop a Petitions policy to enhance the role of the public in governance.

In our quest to become an activist Legislature, we will develop a framework to manage constituency work. This will mainstream the role of the public in the activities of the Legislature.

4 1.3 Current organogram

SPEAKER

GM: SPEAKERSHIP

SECRETARY

GM: STRATEGY 5

COO CPO CFO

GM: GM: GM: GM: LEGAL GM: PPU HANSARD GM: GM: IITS OVERSIGHT GM: SCM IHRM SERVICES & HOUSE FINANCE BUSINESS 1.4 Overview of the service delivery environment

The 2015/16 annual report is presented at the backdrop of the financial challenges that are not only facing the Legislature and the Province but also the country at large. The shrink of the national purse has compelled us to implement cost-cutting measures and reprioritise our targets according to the available budget.

In the year under review, we intensified our public participation processes to ensure continuous realization of public participation that permeates through all the activities of the Legislature. We had three (3) public participation programmes which included our watershed Program of Taking the Legislature to the People, Youth Parliament, and Women’s Parliament. Attendance and participation by the public in these programmes was satisfactory.

Our Petitions Committee is always on the ground listening and attending to petitions from various people in our Province. We are pleased with the feedback that we continue to receive from the petitioners whose matters get resolved as a result of intervention by the Petitions Committee of the Legislature.

Our Portfolios Committees were also hard at work ensuring that the Executive accounts to the public on their Programmes. Our Oversight processes are guided by the Sector Oversight Model and in the financial year under review, we have begun to consider quarterly reports of the Departments as dictated by the Sector Oversight Model.

Our flagship Programme of visiting schools has been elevated to new heights and we have visited the schools in January and in June. The aim of this Program is to foster the culture of learning and teaching and also to understand the challenges that are faced by leaners, educators and the Department, so that intervention measures may be put in place.

As the Legislature, we are bound to conduct our activities in a manner that promotes efficiency and good governance so that the rest of the Provincial Administration may emulate us. We have put in place all the necessary controls and in the year under review, we had all the governance Committees such as the Risk Committee, the Audit Committee and the Internal Audit unit.

A need was identified to align the organisational structure with the imperatives of the 5th term of the Legislature and therefore the process for an organisational review is underway. All the top management posts were filled by the end of the financial year and there was therefore stability at top management. The Legislature is in the process of migrating from BAS and PERSAL to the ERP system in line with the Financial Management of Parliament and Provincial Legislatures, Act 1999 and has appointed the service provider to assist in the management of the transition. Staff Members have been taken through the change management process and are now being taken through training on the new system.

1.5 Departmental revenue

The Legislature is not a major revenue collecting Institution. The only revenue collected relates to the disposal of obsolete assets, commission received from the implementation of salary deductions relating to insurance, among others, donations received from sponsors (See Part: E).

2.1 Strategic Outcome Oriented Goals

The table below contains the strategic goals and objectives, which are aligned to the vision of the Legislature. These strategic goals and objectives serve as the measuring tool against the performance of the Institution.

Strategic Goal 1: Strengthened oversight role of the legislature

Strategic Objective 1.1: Full implementation of the Eastern Cape Legislature oversight model

Strategic Objective 1.2: Strengthen relations with constitutional organs and relevant stakeholders

Strategic Goal 2: Effective Law Making Effective participation of the legislature in the national law making Strategic Objective 2.1: processes

Strategic Objective 2.2: Enhance the capacity of the legislature to make, amend and pass laws

Strategic Goal 3: Deepened participatory democracy

Strategic Objective 3.1 Enhance the mechanisms to promote public involvement in government processes

Strategic Objective 3.2: Coordinate and streamline constituency work into the legislature programme Strategic Goal 4 Strengthened good governance Sound corporate governance through effective internal control Strategic Objectives 4.1: environment. Strategic Objectives 4.2: Provision of adequate strategic and technical support to achieve organisational goals

2.2 Performance Information by Programme Performance information is used as a tool for effective management and leadership in relation to planning, budgeting, implementation, monitoring and reporting. It is used as a tool to monitor progress against the strategic goals of the Institution. Performance information of the Legislature is contained in Part B of the Annual Report. The report is linked to the strategic goals and objectives of the institution

8 2.3 PROGRAMME 1: ADMINISTRATION

2.3.1. Office of the Speaker

Strategic Objective Strengthen relations with constitutional organs and relevant stakeholders Reporting Actual performance against target Performance Indicator period Annual Target 2015/16 Actual Deviation Explanation 1 Reports on Quarterly 4 reports on engagements 3 reports on engagements with 1 report on engagements with Institutions engagements with with institutions supporting institutions supporting democracy Supporting Democracy was not submitted as the institutions democracy compiled compiled planned engagement did not formally take place supporting democracy during the 3rd quarter. compiled Nevertheless the work was done as the Speaker’s Office facilitated for SAHRC to engage with the Department of Education to deal with outstanding matters. 2 Reports on outreach Quarterly 4 reports on outreach 3 reports on outreach 1 report could not be submitted as planned as 9 programmes programmes compiled programmes compiled there was no successful outreach during the 4th compiled quarter. The EXCO Members though met with Amakomkhulu to sell the idea of Voter Education. 3 Reports on Speakers Quarterly 4 reports on Speakers forum 4 reports on Speakers forum - forum compiled compiled compiled 4 Reports on Quarterly 4 reports on international 2 reports on international Only 2 international engagements are planned. international engagements compiled engagements compiled For the other 2, the Institution depends on engagements invitations hence the reduction for the outer compiled years. Strategic Objective Strengthen relations with constitutional organs and relevant stakeholders

Reporting Actual performance against target Performance Indicator period Annual Target 2015/16 Actual Deviation Explanation 5 Reports on Quarterly 4 reports on engagements with internal 4 reports on engagements - engagements with and external stakeholders compiled with internal and external internal and external stakeholders compiled stakeholders

Strategic Objective Enhance the mechanisms to promote public involvement in government processes

6 Reports on media Quarterly 4 reports on media strategies employed to 4 reports on media - strategies employed to interact with the public strategies employed to interact with the public interact with the public

10 2.3.2. Office of the Secretary

2.3.2.1. Office support to the Secretary

Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals Reporting Actual performance against target Performance Indicator Annual Target 2015/16 period Actual Deviation Explanation 1 Management reports Quarterly 11 Management reports to the Executive 9 Management reports to 2 Management reports to the Executive to the Executive Committee compiled the Executive Committee Committee were not submitted as the Committee compiled compiled planned meetings did not take place in December 2015 and January 2016. The subsequent reports tabled in the meetings held on (February & March) covered all the aspects from the previous meetings. 2 Reports to Rules Quarterly 4 reports to Rules Committee compiled 4 reports to Rules - Committee compiled Committee compiled Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals Reporting Actual performance against target Performance Indicator Annual Target 2015/16 period Actual Deviation Explanation 3 Reports on Quarterly 11 reports on management engagements 11 reports on management - management compiled engagements compiled engagements compiled 4 Reports on Quarterly 4 report on engagement with 4 reports on engagement - engagement with parliamentary associations compiled with parliamentary parliamentary associations compiled associations compiled

2.3.2.2. Strategy, Policy, Monitoring and Evaluation

Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals Reporting Actual performance against target

11 Performance Indicator Period Annual Target 2015/16 Actual Deviation Explanation 1 Institutional plans Annually Five Year Strategic Plan Developed Five Year Strategic Plan developed - developed Bi-annually Annual Performance Plan Developed Annual Performance Plan developed - Annually Operational Plan developed Operational Plan developed - 2 Performance reports Quarterly 4 quarterly reports compiled 4 quarterly reports compiled - compiled Bi-annually 1 Annual performance report compiled 1 Annual performance report compiled - Annually 1 Half year report coordinated 1 Half year report coordinated - 3 Organisational Bi-annually 1 Policy Speech Coordinated 1 ECPL Policy Speech Coordinated - policies approved 12 organisational policies approved 12 organisational policies approved 3 policies are pending approval by the Rules Committee

2.3.2.3. Employee Relations

Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals Actual performance against target Reporting Performance Indicator Annual Period Actual Deviation Explanation Target 2015/16 1 Awareness sessions Quarterly 4 training sessions conducted to create a 4 training sessions conducted to create a - towards creating a conducive environment conducive environment conducive work Quarterly 4 training sessions on labour law prescripts 4 training sessions on labour law prescripts - environment facilitated facilitated conducted 2 Reports on employer- Annually 1 report on collective bargaining processes 1 report on collective bargaining processes - employee relations compiled compiled compiled Bi-annually 2 reports on disciplinary and dispute processes 2 reports on disciplinary and dispute - compiled processes compiled

2.3.2.4. Wellness and Special Programmes

12 Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals Actual performance against target Reporting Performance Indicator Annual Period Actual Deviation Explanation Target 2015/16 1 Reports on the Quarterly 4 reports on counselling services 4 reports on counselling services compiled - promotion of healthy compiled lifestyle compiled Quarterly 4 reports on the promotion and 4 reports on the promotion and awareness of - awareness of healthy lifestyle healthy lifestyle compiled compiled 2 Reports on health and Quarterly 4 reports on health and safety 4 reports on health and safety audit compiled - safety audit compiled audit compiled

3 Reports on special Quarterly 4 reports on special programmes 4 reports on special programmes mainstreaming - programmes mainstreaming compiled compiled mainstreaming compiled

2.3.3. Financial Management 2.3.3.1. Finance

Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals Reporting Actual performance against target Performance Indicator period Annual Target 2015/16 Actual Deviation Explanation 1 Consolidated Legislature Quarterly Budget for 2016/17 Budget for 2016/17 - budget produced Consolidated Consolidated Annually Adjustment estimate budget for Adjustment estimate budget for - 2015/16 consolidated 2015/16 consolidated

Strategic Objective Sound corporate governance through effective internal control environment

Reporting Actual performance against target Performance Indicator period Annual Target 2015/16 Actual Deviation Explanation 2 Financial resources monitored Quarterly 12 IYM reports submitted to 12 IYM reports submitted to Treasury - Treasury 13 Annually Annual cash flow projections Annual cash flow projections - submitted to Treasury submitted to Treasury Quarterly 12 monthly cash flow projections 12 monthly cash flow projections - submitted to Treasury submitted to Treasury

Annually AFS for 2014/15 submitted to AFS for 2014/15 submitted to - Treasury and Auditor General Treasury and Auditor General Quarterly 2015/16 Quarterly AFS submitted to 2015/16 Quarterly AFS submitted to - Treasury Treasury Quarterly 12 monthly average payment reports 12 monthly average payment reports -

submitted to Treasury submitted to Treasury

2.3.3.2. Supply Chain Management

Strategic Objective Provision of adequate strategic and technical support to achieve organizational goals Reporting Actual performance against target Performance Indicator period Annual Target 2015/16 Actual Deviation Explanation 1 Annual Procurement Plan Annually 1 Annual 1 Annual - Consolidated Procurement Procurement Plan consolidated Plan consolidated Quarterly 12 procurement 12 procurement - reports compiled reports compiled 2 Updated contract Quarterly 12 monthly 12 monthly - register reports updated contract register updated contract register compiled reports compiled reports compiled 3 Updated Quarterly 12 updated 12 updated - asset register produced asset registers produced asset registers produced Bi-annually 2 asset counts 2 asset counts -

14 completed Completed Quarterly 12 monthly inventory count records 12 monthly inventory count - and reconciliations records and reconciliations submitted submitted 4 Reports on Quarterly 4 reports on 1 report on The base information for vehicle vehicle insurance, usage and vehicle insurance, usage and tracker vehicle insurance, usage and insurance and usage was tracker systems systems tracker systems compiled; the Tracker system was compiled compiled compiled offline from May 2015 to March 2016; administrative support was limited and 3 consolidated reports were not compiled and submitted 5 Reports on orders issued, Quarterly 12 reports on orders issued, 12 reports on orders issued, - invoices received and invoices received and invoices received and submitted for payments submitted for payments submitted for payments 2.3.3.3. Risk Management and Compliance

Strategic Objective Sound corporate governance through effective internal control environment Actual performance against target Performance Indicator Reporting period Annual Target 2015/16 Actual Deviation Explanation 1 Risk management plan Annually 1 updated risk assessment report 1 updated risk assessment - implemented developed report developed Quarterly 4 Risk committee reports submitted 4 Risk committee reports - submitted Annually 1 Fraud & anti-corruption awareness 1 Fraud & anti-corruption - campaign conducted awareness campaign conducted 2 Implementation of Audit Quarterly 6 Audit Committee reports produced 8 Audit Committee reports A need was identified to have resolutions monitored produced additional audit committee meeting 3 Implementation of internal Annually 1 Audit Turnaround Plan developed 1 Audit Turnaround Plan - and external audit developed 15 recommendations monitored

2.3.4. Integrated Human Resource Management 2.3.4.1. Human Resource Development and Organizational Development

Strategic Objective Provision of adequate strategic and technical support to achieve organizational goals Actual performance against target Performance Indicator Reporting period Annual Target 2015/16 Actual Deviation Explanation 1 Reports on implementation Quarterly 4 reports on implementation of HRD 4 reports on implementation of - of HRD policies compiled policies compiled HRD policies compiled 2 Approved Five-Year HR Plan Annually Approved Five-Year HR plan Approved Five-Year HR plan - Implemented implemented implemented 3 Reports on MPLs HRD Quarterly 4 reports on MPLs HRD programme 4 reports on MPLs HRD - programme developed developed programme developed 4 Reports on implementation Quarterly 4 reports on implementation of OD 4 reports on implementation of - of OD policies compiled policies compiled. OD policies compiled. 2.3.4.2. Human Resource Management

Strategic Objective Provision of adequate strategic and technical support to achieve organizational goals Reporting Actual performance against target Performance Indicator period Annual Target 2015/16 Actual Deviation Explanation 1 Reports on human resource acquisition Quarterly 4 reports on human resource 4 reports on human resource - compiled acquisition compiled acquisition compiled 2 Annual financial disclosure reports compiled Quarterly 4 annual financial disclosure 4 annual financial disclosure - reports compiled reports compiled 3 Personnel records management reports Quarterly 4 personnel records 4 personnel records - compiled management reports compiled management reports compiled 4 PERSAL system control and monitoring reports Quarterly 4 PERSAL system control and 4 PERSAL system control and - compiled monitoring reports compiled monitoring reports compiled 5 Reports on provision of employee benefits Quarterly 4 reports on provision of 4 reports on provision of - compiled employee benefits compiled employee benefits compiled

2.3.5. Integrated Information and Technical Services 16 2.3.5.1. Information Technology

Strategic Objective Sound corporate governance through effective internal control environment Reporting Actual performance against target Performance Indicator period Annual Target 2015/16 Actual Deviation Explanation 1 Monitoring reports on ICT contracts compiled Quarterly 4 Monitoring reports on ICT 4 Monitoring reports on ICT - contracts compiled contracts compiled Strategic Objective Provision of adequate strategic and technical support to achieve organizational goals

2 Reports on the implementation of the Quarterly 4 reports on the implementation 4 reports on the - Information and Communication Technology of the Information and implementation of the (ICT) Governance Framework Communication Technology (ICT) Information and Governance Framework Communication Technology (ICT) Governance Framework 3 Reports on provision of ICT connectivity Quarterly 4 Reports on provision of ICT 4 Reports on provision of ICT - compiled connectivity compiled connectivity compiled 2.3.5.2. Library and Archive Services

Strategic Objective Sound corporate governance through effective internal control environment Actual performance against target Performance Indicator Reporting period Annual Target 2015/16 Actual Deviation Explanation 1 Monitoring reports on Quarterly 4 Monitoring reports on library and 4 Monitoring reports on library and - library and archive services archives services contracts compiled archives services contracts compiled contracts compiled Strategic Objective Provision of adequate strategic and technical support to achieve organizational goals 2 Reports on library and Quarterly 4 reports on library and archive services 4 reports on library and archive - archive services compiled compiled services compiled 3 Reports on partnerships Quarterly 4 reports on partnerships entered into 4 reports on partnerships entered - entered into with with information agencies compiled into with information agencies information agencies compiled compiled

17 2.3.5.3. Safety and Security Services

Strategic Objective Sound corporate governance through effective internal control environment. Actual performance against target Performance Indicator Reporting period Annual Target 2015/16 Actual Deviation Explanation Monitoring reports on Quarterly 4 monitoring reports on security services 4 monitoring reports on security - 1 security services contracts contracts compiled services contracts compiled compiled Strategic Objective Provision of adequate strategic and technical support to achieve organizational goals 2 Reports on partnerships Quarterly 4 reports on partnerships entered into 4 reports on partnerships entered - entered into with security with security agencies compiled into with security agencies compiled agencies compiled 3 Reports on implementation Bi Annually 2 reports on Phase 2 of the integrated 2 reports on Phase 2 of the integrated - of the integrated access access control system compiled access control system compiled control systems compiled 4 Reports on security Bi-Annually 2 reports on security awareness 2 reports on security awareness - awareness programmes programmes compiled programmes compiled compiled Quarterly 12 security risks reports compiled 12 security risks reports compiled - 2.3.5.4. Office Support and Household

2 Reports on management of Quarterly 4 Reports on management of facilities 4 Reports on management of facilities - facilities for a conducive for a conducive and safe working for a conducive and safe working and safe working environment compiled environment compiled environment compiled

2.4. PROGRAMME 2: ENABLING FACILITIES FOR MEMBERS AND POLITICAL PARTIES

2.4.1. Enabling facilities and Benefits for Members

2 Reports on Quarterly 4 reports on management of 4 reports on management of financial - management of financial affairs of political parties affairs of political parties financial affairs of

19 political parties 3 Reports on Quarterly 4 reports on Constituency offices 4 reports on Constituency offices compiled - Constituency offices compiled compiled

2.5. PROGRAMME 3: PARLIAMENTARY SERVICES

2.5.1. Oversight services 2.5.1.1. Committees

Strategic Objective Full implementation of the Eastern Cape Legislature oversight model Actual performance against target Performance Indicator Reporting period Annual Target 2015/16 Actual Deviation Explanation 1 Strategic Plans for Annually Strategic Plan for Portfolio Strategic Plan for Portfolio Committees - Portfolio Committees Committees developed developed developed 2 Reports considered by Annually 14 Budget Votes, APPs and 14 Budget Votes, APPs and Strategic - portfolio committees Strategic Plans considered by Plans considered by Portfolio Portfolio Committees Committees Annually 14 Annual Reports of various 14 Annual Reports of various -

20 government departments government departments considered considered by Portfolio by Portfolio Committees Committees Annually 14 Financial Oversight Reports of 14 Financial Oversight Reports of - various government departments various government departments considered by Portfolio considered by Portfolio Committees Committees 3 Reports on Audit Reports Annually 1 report on Audit Reports 1 report on Audit Reports considered - considered by the considered by the Standing by the Standing Committee on Public Standing Committee on Committee on Public Accounts Accounts (SCOPA) Public Accounts (SCOPA) (SCOPA) 4 Reports on Portfolio Quarterly 10 reports on Portfolio Committee 10 reports on Portfolio Committee - Committee oversight visits oversight visits produced oversight visits produced produced 5 Reports on Committee of Quarterly 4 reports on Committee of 4 reports on Committee of - Chairpersons Chairpersons engagements Chairpersons engagements engagements coordinated coordinated coordinated Strategic Objective Full implementation of the Eastern Cape Legislature oversight model Actual performance against target Performance Indicator Reporting period Annual Target 2015/16 Actual Deviation Explanation 6 International study tours Quarterly 4 International study tours 4 International study tours undertaken - undertaken by Portfolio undertaken by Portfolio by Portfolio Committees Committees Committees Strategic objective Enhance the capacity of the Legislature to make, amend and pass laws 7 Bills considered by Quarterly 3 Provincial Bills considered by 2 Provincial Bills considered by Only 2 Bills were considered Portfolio Committees Portfolio Committees Portfolio Committees by Portfolio Committees 8 NCOP Bills considered by 3 NCOP Bills considered by Portfolio Only 3 Bills were considered Portfolio Committees Committees by Portfolio Committees

2.5.1.2. Research

Strategic Objective Full implementation of the Eastern Cape Legislature oversight model 21 Actual performance against target Performance Indicator Reporting period Annual Target 2015/16 Actual Deviation Explanation 1 Research reports analysis Annually 14 Budget analysis reports 14 Budget analysis reports produced - on departmental produced performance produced Annually 14 reports analysis on House 14 reports analysis on House - resolutions resolutions Annually 14 half year financial oversight 14 half year financial oversight reports - reports analysis produced analysis produced Annually 14 Annual reports analysis 14 Annual reports analysis produced - produced 2 Research reports on site Quarterly 168 research reports on site visits 181 research reports on site visits More site visits were as a visits produced produced produced result of service delivery protests, which required urgent interventions. 3 Public outreach research Annually 1 Public outreach research report 1 Public outreach research report - reports produced produced produced Strategic Objective Full implementation of the Eastern Cape Legislature oversight model Actual performance against target Performance Indicator Reporting period Annual Target 2015/16 Actual Deviation Explanation 4 Reports on Focus Bi-annually 2 focused intervention study 2 focused intervention study reports - Intervention research reports produced produced services produced

2.5.2. Public Participation and Communications 2.5.2.1. Public Participation and Petitions

22 Parliaments compiled compiled compiled 2 Reports on Petitions compiled Quarterly 4 reports on petitions compiled 4 reports on petitions compiled -

3 Reports on Public education Quarterly 4 reports on public education 4 reports on public education - programmes compiled programmes compiled programmes compiled

4 Reports on Public Hearings Quarterly 4 reports on public hearings compiled 4 reports on public hearings compiled - compiled

2.5.2.2. Communications

Strategic Objective Enhance the mechanisms to promote public involvement in legislative and other activities of the Legislature Reporting Actual performance against target Performance Indicator period Annual Target 2015/16 Actual Deviation Explanation 1 Reports on publicity of the Quarterly 4 reports on publicity of the Legislature 4 reports on publicity of the - Legislature produced produced Legislature produced 2 Reports on branding of the Quarterly 4 reports on branding of the Legislature 4 reports on branding of the - Legislature produced produced Legislature produced 3 Reports on marketing of the Quarterly 4 reports on marketing of the Legislature 4 reports on marketing of the - Legislature produced produced Legislature produced

4 Reports on facilitation of Quarterly 4 reports on facilitation of internal 4 reports on facilitation of internal - internal communications communications produced communications produced produced 5 Reports on social media Quarterly 4 reports on social media interventions 4 reports on social media - interventions produced produced interventions produced 23

2.5.3. Law Making 2.5.3.1. House Proceedings

Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals Reporting Actual performance against target Performance Indicator period Annual Target 2015/16 Actual Deviation Explanation 1 Reports on documents Quarterly 4 Reports on documents prepared 4 Reports on documents prepared - prepared and distributed to and distributed to facilitate House and distributed to facilitate House facilitate House sittings sittings sittings Legislature programme updated Quarterly 44 Legislature Programs updated 44 Legislature Programs updated - 2 8 Programming Committee meetings 8 Programming Committee meetings - supported supported

3 House Resolutions Quarterly 39 sets of House Resolutions 39 sets of House Resolutions - communicated to departments communicated to departments communicated to departments 4 Departmental response to Quarterly 39 Departmental responses tracked 39 Departmental responses tracked - 24 House Resolutions tracked 5 Documents received from Bi-Annually 28 documents received from 28 documents received from - Departments for tabling (i.e. Departments for tabling Departments for tabling Annual Performance Plans and Annual Reports)

2.5.3.2. Hansard and Language services

Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals Reporting Annual Actual performance against target Performance Indicator period Target 2015/16 Actual Deviation Explanation 1 Transcripts of House debates Quarterly 25 transcripts of house debates 23 transcripts of house debates The House did not sit produced produced produced according to the Annual Target due to changes in the Legislature programme. The Parliament for the Elderly and Worker’s Parliament did not take place as planned. 2 Reports on Translated versions Quarterly 4 Reports on Translated versions of 4 Reports on Translated versions of - of Order Papers and Minutes Order Papers and Minutes produced Order Papers and Minutes produced

25 produced 3 House Sittings and Quarterly 25 House sittings including 23 House sittings including The House did not sit Institutionalized Days provided Institutionalised Days provided with Institutionalised Days provided with according to the Annual with interpretation services interpretation services interpretation services Target due to changes in the Legislature programme. The Parliament for the Elderly and Worker’s Parliament did not take place as planned 4 Reports on Members Question Quarterly 4 reports on Members Question 4 reports on Members Question - Papers formulated Papers formulated Papers formulated

2.5.3.3. National Council of Provinces (NCOP)

Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals

Actual performance against target Performance Indicator Reporting period Annual Target 2015/16 Actual Deviation Explanation 1 Reports on NCOP-ECPL Quarterly 4 reports on ECPL-Permanent 4 reports on ECPL-Permanent - activities produced Delegates engagements Delegates engagements Quarterly 4 reports on ECPL-Special 4 reports on ECPL-Special - Delegates engagements Delegates engagements 2 Reports on Provincial Bi-Annually 2 reports on Provincial week 2 reports on Provincial week - Week produced produced produced Strategic Objective Effective participation of the legislature in the national law making processes 3 NCOP Bills processed Quarterly 20 NCOP Bills processed 19 NCOP Bills processed Fewer Bills were received from NCOP than anticipated 26 Quarterly 5 negotiating mandates processed. 5 negotiating mandates processed. -

Quarterly 6 final/voting mandates processed 5 final/voting mandates processed Fewer final/voting mandates were requested by NCOP than anticipated 4 Reports on Budget votes Annually 1 report on budget votes produced 1 report on budget votes produced - produced 2.5.3.4. International Relations, Protocol and Ceremonial Services

Strategic Objective Provision of adequate strategic and technical support to achieve organisational goals

Reporting Actual performance against target Performance Indicator Annual Target 2015/16 period Actual Deviation Explanation 1 Reports on International Quarterly 4 reports on international 4 reports on international - Relations coordinated relations coordinated relations coordinated 2 Reports on Protocol and Quarterly 4 reports on protocol and 4 reports on protocol and - Ceremonial services ceremonial services provided ceremonial services provided provided

2.5.4. Legal Services

Strategic Objective Enhance the capacity of the Legislature to make, amend and pass laws 27 Actual performance against target Reporting Performance Indicator Annual Target 2015/16 period Actual Deviation Explanation 1 Bills facilitated for Quarterly 20 NCOP Bills facilitated for 20 NCOP Bills facilitated for - consideration by the consideration by the Legislature consideration by the Legislature Legislature Quarterly 5 Provincial Bills facilitated for 6 Provincial Bills were facilitated More Bills were introduced by EXCO than consideration by the Legislature for consideration by the anticipated. Legislature 2 Legal opinions provided. Quarterly 16 legal opinions provided. 18 legal opinions provided The request was high and the planning is based on trend. 3 Litigation matters dealt Quarterly 4 litigation matters dealt with 4 litigation matters dealt with - with 4 Contracts drafted or Quarterly 10 contracts drafted or scrutinised 10 contracts drafted or - scrutinised scrutinised

PART C: GOVERNANCE

3.1 REPORT OF THE ACCOUNTING OFFICER FOR THE YEAR ENDED 31 MARCH 2016

General review of the state of financial affairs

Despite the challenges, the Legislature has been able to maintain an effective internal control environment with notable efficiency in implementing its core programmes. While the aim was to achieve an unqualified audit opinion in the new reporting requirements, getting an unqualified audit report with other matters was justified given the circumstances.

The Information and Technology Infrastructure

The Legislature’s Information and Technology infrastructure was strengthened with the installation of wireless network infrastructure resulting in improved access for both the Members and staff of the Legislature. However the installation of the wireless network exposed the vulnerability of the core network infrastructure of the ECPL that is old and unable to cater for the new technologies that are being implemented. The environmental assessment was done, and the core network infrastructure will be upgraded in terms of scalability, stability and reliability by upgrading the core switch that will have bigger capacity ports and connect every remote cabinet directly to the core switch via fibre optic cable. This will ensure that the structure of the ECPL Network will have a smooth integration of additional networks and systems on the network moving forward.

Relationship with the Local Sphere and Institutions to support democracy

Activities that were planned to enhance cooperation and coordination with our strategic partners were implemented by the Office of the Speaker. Amongst the key areas were the Speakers' Forum coordination and engagements with State Institutions Supporting Democracy (SISD). The Speaker met with Municipal Speakers to discuss pertinent matters. Through these interactions the forum held a successful workshop of all Speakers on legislative imperatives like Separation of Powers, Conduct of Public Participation, Management of Petitions, Civic Education, Code of Ethics and Delegations Framework. The forum also made it possible for the Province to revive the Moral Regeneration Movement run by civil society.

The SISD have had fruitful interactions with the Speaker. The important achievement was for the work of the SISD to be filtered through to Legislature’s oversight work. The Chairperson of Committees had been seized with this work of interfacing with them for the Chairpersons of Oversight Committees to be able to directly interact with these Institutions in executing oversight on all government departments, entities and municipalities.

30 Public Participation and Petitions Committee

In the fourth term a dedicated Committee to deal with public participation and petitions was established with the following mandate.

 Consider petitions submitted to the Legislature and referred to it in terms of the Rules of the Legislature;  Record any written or oral submission or evidence that may be made on a petition,  Where applicable, advise a petitioner on other appropriate remedies available to him or her;

The work of the petitions Committee is bearing fruits as can be witnessed from the number of petitions they have considered. In the year under review 136 petitions were considered. The committee has further enhanced its working relations with other Portfolio Committees especially when doing programs such as public hearings. Through the leadership and supervision of the PPP committee, all sectoral days were successfully hosted by the Institution. Public education programmes were successfully rolled out to the members of the public through workshops and public meetings which were addressed by Members of the PPP Committee.

Law making

The legislature continued to improve on its participation in national legislation. It has participated in all Section 76 Bills by successfully providing negotiating and final mandates to its National Council of Provinces (NCOP) delegation. The Legislature also continued to enhance its capacity to make, amend and pass laws by considering 06 provincial bills. In line with the reviewing of the existing laws, 16 pieces of legislation which are offensive or obsolete were repealed.

Major events

Public participation programme has created a space for the public to interact face to face with their public representatives. In these session members of the public raise issues that affect them in their specific areas and resolutions are directed to various government departments for immediate responses.

In the year under review, the following sectoral parliaments were held:

1. Youth Parliament

2. Women’s Parliament

3. Taking Legislature to the People in Port Elizabeth

4. State of the Province Address

Organizational Overview

The focus area of the Legislature this year has been to deepen and entrench a people-centred democracy in the Eastern Cape Province. The following priorities have received special focus:  Public participation, petitions and education  Vigorous oversight  Law-making This was done through maximizing public participation, public education and optimizing the citizen’s right to petition departments. A fully fledged Public Participation, Petitions and Education Unit was established to

31 enhance the Legislature’s capability to deliver on this strategic goal. Public Education officers from this unit have spent more time within communities.

A special focus was given on the following Governance and Administration matters:

 Change Management  Organogram Review  Human capital development  Information and technology system  Policy development, and  Security management

Risk Management

Efforts to improve controls within the environment of the administrative arm of the Legislature were strengthened. Internal Audit function remains an outsourced function.

Employee Relations

The relations between Management and Labour have stabilized and this has created a good environment for Members of the Legislature to operate. In the 2015/16 financial year, we took a proactive approach and scheduled monthly meetings of the Management and Labour Forum. This proved to be fruitful as all the matters of mutual interest were adequately addressed. Policy Development

Eighteen (18) policies affecting Members of the Legislature were reviewed in the last financial year. These policies are the cornerstone of the work of Members and are critical in enhancing service delivery and performance. These strategic interventions, through policy development and adoption, are intended to transform the Legislature into an efficient and effective institution that is able to deliver on its mandate. More policies will be reviewed in the next year so as to create a conductive regulatory framework for the Eastern Cape Legislature.

Security Management

As reported in the 2014/15 annual report Phase One of the Access Control Project, which cost around R1,3 million was 90% completed with the installation of the boom gate at the main entrance, spikes, card reader, biometrics, installation of cameras, pedestrian access as well as the upgrading of the control room. It is now completed and the installation of the following has been done:-

 Main Gate- Guard post, turn style machine, bio-metric poles, boom gates, 7 CCTV cameras, spikes, traffic lights, search park area, construction of speed humps and signage, wheel chair ramp.  Installation of 2 monitoring screens at the control.

The rollout of Phase 2 which was earmarked for 2015/16 could not be implemented as planned due to budget constraints. We have engaged the Department of Roads and Public Works to allow us to do the procurement internally and this request has been acceded to. We will finalise the procurement process of this phase as more funds become available, this phase will be implemented.

32 Expenditure

The Legislature spent an amount of R472, 137 million, 99.6% of a total budget of R474, 229 million during the 2015/16 financial year. This spending trend is consistent with that of the previous financial year. All the programmes and items also consistently spend above 90%, with compensation of employees overspending by 1, 1% including member’s salaries. The reported over expenditure is due to overspending of direct charge. The goods and services budget shows an underspending of 5.2%.

The contributing factor on reporting underspending on goods on services is due to accruals raised at year end. Expenditure as Adjusted Final Actual Virement Variance % of final Appropriation Appropriation Expenditure appropriation R'000 R'000 R'000 R'000 R'000 % Programme Administration 163 765 (2 243) 161 522 157 718 3 804 97.6% Facilities for 131 236 4 768 136 004 136 004 - 100.0% Members and Political Parties Parliamentary 119 817 (2 525) 117 292 115 453 1 839 98.4% Services Programme sub 414 818 - 414 818 409 179 5 643 98.6% total Statutory 59 411 - 59 411 62 962 (3 551) 106.0% Appropriation TOTAL 474 229 - 474 229 472 137 2 092 99.6%

The above tables illustrate the budget and expenditure outcomes on a cash basis as the budget is allocated on the cash basis. The difference between the expenditure reported above the annual financial statements is because the expenditure reported in the financial statements is on the accrual basis of accounting in line with the GRAP standards and is inclusive of non-cash items and exclusive of expenditure on acquisition of capital assets and inventory.

The following systems and processes were in place during the year under review to continuously address and improve financial management:  Quarterly reporting and monitoring of finances through reports on key accounts on revenue, expenditure, assets and liabilities;  Development of an action plan to address matters raised by the Auditor-General and regular monitoring of progress on the implementation of corrective measures;  A functional Internal Audit and Audit Committee;  Risk Management function and Risk Management Committee; and  Financial and other corporate governance policies, procedures and strategies.  The Legislature continued to implement processes and systems for prudent financial management aimed at reducing accruals in the reporting period and also to ensure that wasteful spending is avoided.  The revenue collected during the year amounted to R515 thousand against a target of R367 thousand. This represents over collection of 40.3% from the planned target. The over collection can be attributed to interest on bank balance, recoveries from debtors and donations received. Due to the social nature of its operations which is in line with the constitutional mandate, It must however be noted that the Legislature is not a revenue generation institution.

33  The retained income from the 2014/15 financial year revenue generation and unspent funds was re- appropriated in the reporting period. The funds were utilised to augment budgets for under-funded projects.

The virements and shifting of funds between programmes and sub-programmes have been effected to defray overspending on sub programmes and main divisions. An amount of R 4, 768 million was thus shifted from Programme 1 and programme 3 to Programme 2 to defray overspending within compensation of employees in programme 2.

An unauthorised expenditure of R 3 thousand rand was incurred and condoned during the year under review; no unauthorised expenditure was reported during 2014/15 financial year. A closing balance of R 2,191 million has been reported on irregular expenditure for the reporting period due to non-compliance with the SCM policy.

Management will continuously monitor the implementation of internal controls to ensure that procurement processes and regulations are followed and to avoid wasteful expenditure. An SCM/Payment Compliance checklist is attached to all vouchers to facilitate the screening of financial transactions at various processing stages.

Capacity constraints and challenges facing the Legislature

During the year under review, the Legislature continued to operate while some critical positions remained vacant. Emerging as a result of the introduction of the migration from the cash basis to the accrual basis of accounting raised the need for appropriately qualified and experienced staff on the implementation of the standards of GRAP. To this end, expert services were sourced to assist the Legislature on manual migration to GRAP as the institution did not manage the implement an ERP system. Financial processes could not be streamlined due to non-implementation of the system that will support full migration to GRAP. This work however, will continue in the next financial year in order to align policies and procedures to the financial management act.

New or proposed activities

For the year under review Legislature has been governed by FMPPLA which necessitated change of the reporting framework. ECPL opted to utilised directive 8 to transitionally migrate from modified cash reporting framework to accrual basis of accounting. Even though the migration from the cash basis to the accrual basis of accounting is introduced in the year under review, it is still work that requires continuous development and capacity building within the Legislature.

Supply chain management

No unsolicited bid proposals were concluded during the year under review. The following SCM systems and structures were in place: An SCM Policy, Asset Management Policy, SCM Bid committees. Management will build on the progress made to ensure compliance with GRAP for reporting on property plant and equipment in the coming year. The SCM Policy and Asset Management Policy will also be reviewed in the coming year to ensure alignment with FMPPLA and regulations and the standards of GRAP.

34 Events after the reporting date The Legislature has awarded a bid for the chamber upgrade subsequent to the reporting period. The project is expected to be completed during the 2016/17 financial year. This system enhancement is expected to improve the work of Members during the Sittings of the House.

SCOPA resolutions There were no SCOPA (Standing Committee on Public Accounts) resolutions on the Legislature during this financial year.

Prior modifications to audit reports No prior year modifications were done on the Audit Report.

Organisations to whom transfer payments have been made The Legislature has made transfer payments for Constituency, Caucus and Political Party Allowances to all represented political parties, in terms of the adopted policy on Financial and Administrative assistance to Political Parties represented in Eastern Cape Provincial Legislature, in proportion to their seat allocations in the Eastern Cape Provincial Legislature Chamber. Transfers payments were made to the following Political Parties throughout the year;

 African National Congress (ANC),  Democratic Alliance (DA),  United Democratic Movement (UDM),  Economic Freedom Fighters (EFF),  Congress of the People (COPE),  African Independent Congress (AIC).

Programme and budget structure There were no changes on the Programme and Budget Structure in the year under review.

Interim financial statements The delays in funding of the ERP system, the institution managed to manually produce GRAP compliant AFS during the 3rd quarter of the year under review. Interim AFS in line with modified cash basis requirements were produced and submitted to Treasury. 9 months GRAP compliant Interim financial statements were prepared and reviewed by management and internal audit. This review processes was useful during the year under review and will also be pursued in the forthcoming years in order to further improve completeness and accuracy of financial statements of the Legislature.

Acknowledgements and appreciation

The contribution made by Legislature oversight committee, management and staff of the Legislature, Internal Audit, Audit Committee, and Auditor-General in the preparation of the annual report is hereby acknowledged.

Conclusion The Secretary to the Legislature as the Accounting Officer hereby commits to operating a clean administration by ensuring that relevant systems, processes and policies are implemented in ensuring enhanced accountability. It is also on the basis of information and explanations provided by management, that the system of internal control provides reasonable assurance that the financial and non-financial information of the Legislature may be relied on for the preparation of the annual report.

35 The financial statements are prepared on the basis that the Legislature is a going concern and that there is neither the intention, nor need or legal requirement to discontinue or materially curtail the scale of the operations of the organisation.

Approval The Annual Financial Statements set out on pages 72 to 138 have been approved by the Accounting Officer.

______

V. MAPOLISA SECRETARY TO THE LEGISLATURE ACCOUNTING OFFICER

36 3.2 Risk Management

In terms of Section 7 (c) of the Financial Management of Parliament and Provincial Legislatures Act, Act No. 10 of 2009), the Accounting Officer must ensure that:

(c) Parliament maintains effective, efficient and transparent systems of financial management, risk management, internal control and internal audit.

The Legislature continues to have an effective and efficient Risk Management Unit in place which maintains and has the following systems and internal controls:

 An adopted Risk Management Policy and Risk Management Strategy are in place which is monitored on a quarterly basis.  Regular risk assessments are conducted on an annual basis to determine the effectiveness of the Risk Management Strategy and identifying new and emerging risks.  A functional Risk Management Committee has been appointed which advises Management, the Accounting Officer and the Audit Committee on the overall system of risk management.  A functional Audit Committee which advises the Legislature on risk management and independently monitors the effectiveness of the Risk Management Unit.

3.3. Fraud and Corruption

The Legislature has an Anti-Fraud and Corruption Strategy in place which has been communicated to all officials. The implementation of the strategy is through awareness workshops which are conducted by the Risk and Compliance Management unit.

Fraud and corruption reporting mechanisms for all officials of the Legislature are clearly outlined in the strategy and the use of the national fraud hotline is included.

Officials are encouraged through the fraud and corruption strategy to make confidential disclosures about fraud and corruption either to the Office of the Premier Fraud hotline, the Accounting Officer, Risk & Compliance Management unit or externally, report or write to anyone of the institutions identified under the Protected Disclosures Act. During the period 01 April 2015 to 31 March 2016 there were no fraud related cases reported.

3.4. Minimising Conflict of Interest

The Legislature has implemented controls to minimise conflict of interest in supply chain management by signing SCM Code of Conduct for all SCM Officials. The Bid Committee members sign declaration of interest forms.

3.5. Code of Conduct

The Legislature has a Disciplinary Code of Conduct in place which has been communicated to all officials through labour relations workshops. Annually the Employee Relations unit brings to the attention of all officials the need to familiarise themselves with the contents of the Disciplinary Code of Conduct.

3.6. Health, Safety and Environmental Issues

The Health and Safety Committee is in place and meets regularly in order to monitor and report on compliance to health and safety legislation and norms.

3.7. Committees:

Fourteen (14) Portfolio Committees were established after the National General Elections of the 7th May 2014. These Committees managed to fulfil the elements of the Sector Oversight Model (SOM) by ensuring that the following reports were tabled and debated in the House:

37  Budget Votes Reports of various government departments and public entities  Annual Reports of various government departments and public entities  Financial Oversight Reports of all government departments and public entities  Quarterly Reports of all government departments and public entities

In addition, the Standing Committee on Public Accounts (SCOPA) also considered audited reports of various departments and public entities for tabling in the House.

3.7.1 Committee Visits

During the period under review, Portfolio Committees conducted eleven (22) oversight visits which were spread across the Province. Portfolio Committees also participated on the pre-visits in preparation for the “Taking Legislature to the People” event which was held in Port Elizabeth in October 2015. The following Portfolio Committees were part of these visits: (1) Education (2) Health (3) Social Development (4) Local Government (5) Economic Development (6) Public Works (7) Agriculture (8) Human Settlement

3.8. Prior Modifications to Audit reports

There are no prior year modifications done on the Audit reports.

3.9 Internal Audit Unit

The Legislature has an outsourced internal audit function which is based in-house. This is an independent, objective body set up to add value and improve the institution’s operations. The internal audit function has been operating in accordance with the approved three-year risk based internal audit rolling plan, which was completed in consultation with Management and approved by the Audit Committee. The Internal Audit function reports administratively to the Accounting Officer and functionally to the Audit Committee as per its terms of reference which were reviewed and adopted by the Audit Committee. The Internal Audit Function has undertaken assignments and submitted reports on the basis of the Internal Audit Plan. The unit has reported on the internal audit recommendations to the Accounting Officer and the Audit Committee based on the work performed in terms of its coverage plan.

3.10. Audit Committee Report

We are pleased to present our report for the financial year ended 31 March 2016.

3.10.1. Audit Committee Members and Attendance

The Audit Committee consists of the members listed hereunder and meets at least four (4) times per annum as per its approved terms of reference. During the current year nine (9) meetings were held. The members and their attendance of the meetings held are as follows:

Meeting type No. of meetings Audit Committee meetings 5 Special Meetings 3 Meetings with Executing Authority (Hon. Speaker) 1 Total 9

Name of Member No. of Meetings Attended Mr S. Ngqwala (Chairperson from 1 October 2014) 9 Mr P.V Msiwa (Appointed 1 October 2014) 4 Mrs T. Cumming (Appointed 1 October 2014) 9 Mr T. de Beer (Appointed 1 October 2014) 9 Mr S.A Mpambani ( Term expired December 2015) 5

38 3.10.2 Audit Committee Responsibility

The Audit Committee reports that it has complied with its responsibilities arising from Section 48 (1) (a) (i) (ii) (iii), (b), (c) (i) (ii) (iii), (d), (e), 2 (a), (b), (c) (i) and (ii) of the Financial Management of Parliament and Provincial Legislatures Act and Treasury Regulation 3.1.13. The Audit Committee also reports that it has adopted appropriate formal terms of reference as its Audit Committee Charter, has regulated its affairs in compliance with this Charter and has discharged all its responsibilities as contained therein.

3.10.3 The effectiveness of internal control

In line with FMPPLA and the King III Report on Corporate Governance requirements, Internal Audit provides the Audit Committee and management with assurance that the internal controls are appropriate and effective. This is achieved by means of the risk management process, as well as the identification of corrective actions and suggested enhancements to the controls and processes. From the various reports of the Internal Auditors, it was noted that matters were reported indicating deficiencies in the system of internal control or deviations therefrom. Accordingly, we can report that the system of internal control was not entirely effective for the year under review.

Although critical risk on GRAP conversion was identified, challenges were experienced in allocating the required resources to deal/address the risk identified. Furthermore, capacity challenges were experienced with the implementation of the of the ICT governance processes.

3.10.4 The quality of in year management and monthly/quarterly reports submitted in terms of the FMPPLA and the Division of Revenue Act.

The Audit Committee is satisfied with the content and quality of the quarterly reports prepared and issued by the Accounting Officer of the Eastern Cape Provincial Legislature during the year under review.

The Audit Committee is partially satisfied with the content and quality of quarterly performance reports prepared and issued by the Accounting Officer of the Eastern Cape Provincial Legislature during the year under review.

3.10.5 Evaluation of Financial Statements and Annual Performance Report

The Audit Committee has:

 Reviewed and discussed the unaudited annual financial statements to be included in the annual report, with the Accounting Officer; including the conversion from Modified Cash Basis accounting standards to accrual accounting basis (GRAP);

 Reviewed for changes in accounting policies and practices;

 Reviewed the information on predetermined objectives to be included in the annual report;

 Advised the Accounting Officer that the financial statements may not be free from material misstatements due to the failure of internal controls during the preparation process; and

 Reviewed the Eastern Cape Provincial Legislature’s compliance with legal and regulatory provisions.

Based on the Audit Committee’s review of the unaudited financial statements and Annual Performance Report, the Committee resolved that they can be recommended to the Executive Authority for submission to the Auditor General-South Africa.

39 3.10.6. Internal Audit

The Audit Committee is satisfied that the Internal Audit function is operating effectively and that it has addressed the risks pertinent to the Legislature in its audits.

The Audit Committee have reviewed the following reports submitted by Internal Audit during the year ended 31 March 2016: -

 Internal Audit Plan which was approved on the 24th April 2015 effective from 1 April 2015;  General Payment Controls and Review of Controls in Respect of Subsistence and Travel Expenditure;  Asset Management: Fleet and Security Management Review;  Performance Information 2016: Quarter one;  Oversight function and Public Participation and Petition function follow-up  ICT Strategic Planning Facilitation;  Facilitation of the Risk Assessment Workshop (Risk Register);  Review of the Draft Annual Performance Plan and the budgeting process;  Review of the Transfer Payments to Political Parties (quarter 1 to quarter 4);  Review of Ethics;  Review of the Fraud Prevention Plan;  Audit Improvement Plan;  Quality Assurance Report on GRAP Conversion;  Review of the deviation of appointment of Altimax; and  Secretarial Services.

The areas of concern to the Audit Committee and the Executive Authority are as follows:

 Transfer Payments to Political Parties with regards to some Political Parties not claiming their allowances on time.  Ethics, relating to low Ethical culture in the Legislature due to non-submission and late submission of the Disclosure forms.  Risk Management due to the fact that the GRAP conversion project was implemented late (3 months before the year-end) and ICT.

We have tasked management to improve these weaknesses.

3.10.7 Auditor-General South Africa (AGSA)

The Audit Committee considered the report of the Auditor General and agrees with the opinion.

40 3.11 Report of the Auditor-General to Eastern Cape Provincial Legislature on Vote No. 2: Eastern Cape Provincial Legislature

Report on the financial statements

Introduction

1. I have audited the financial statements of the Eastern Cape Provincial Legislature set out on pages 71 to 138, which comprise of the statement of the statement of financial position as at 31 March 2016, the statement of financial performance, statement of changes in net assets, comparison of budget and actual amounts and cash flow statement for the year then ended, as well as the notes, comprising a summary of significant accounting policies.

Accounting officer’s responsibility for the financial statements

2. The accounting officer is responsible for the preparation and fair presentation of these financial statements in accordance with South African Standards of Generally Recognised Accounting Practice (GRAP), the Division of Revenue Act of South Africa, 2014 (Act No. 10 of 2014) (DoRA) and the requirements of the Finance Management of Parliament and Provincial Legislature Act of South Africa 2009 (Act No. 10 of 2009) (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.

Auditor-general’s responsibility

3. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing. Those standards require that I comply with ethical requirements, and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

4. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

5. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion.

41 Opinion

6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Eastern Cape Provincial Legislature as at 30 March 2016 and its financial performance and cash flows for the year then ended, in accordance with SA standards of GRAP and the requirements of the FMPPLA.

Emphasis of matter

7. I draw attention to the matter below. My opinion is not modified in respect of this matter.

Financial reporting framework

8. As disclosed in note 2 to the financial statements, the provincial legislature had adopted the GRAP reporting framework on 1 April 2015. These standards have been applied retrospectively, except where the Legislature has taken advantage of directive 8 and reported on provisional amounts.

Irregular expenditure

9. As disclosed in note 35 to the financial statements, irregular expenditure amounting to R2 191 000 was incurred by the Legislature for the year ended 31 March 2016. This was as a result of non-compliance with procurement requirements.

Report on other legal and regulatory requirements

10. 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 findings on the reported performance information against objectives for selected programmes presented in the annual performance report, compliance with Legislation relating to procurement and contract management and internal control. The objective of my tests was to identify reportable findings as described under each subheading, but not to gather evidence to express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

11. I performed procedures to obtain evidence about the usefulness and reliability of the reported performance information for the following selected programmes presented in the annual performance report of the Legislature for the year ended 31 March 2016.

 Programme 2: Facilities for members and political parties - on pages 19

 Programme 3: Parliamentary service - on pages 20 to 27

12. I evaluated the usefulness of the reported performance information against the framework adopted by the Legislature to determine whether the reported performance was consistent with the planned objectives. I also performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant.

13. I assessed the reliability of the reported performance information to determine whether it was valid, accurate and complete.

42 14. I did not identify any material findings on the usefulness and reliability of the reported performance information for the following programmes:

 Programme 2: Facilities for members and political parties

 Programme 3: Parliamentary service.

Additional matter

15. Although I identified no material findings on the usefulness and reliability of the reported performance information for the selected programmes, I draw attention to the following matter:

Achievement of planned targets

16. Refer to the annual performance report on pages 9 to 27 for information on the achievement of the planned targets for the year.

Compliance with legislation

17. I performed procedures to obtain evidence that the legislature had complied with applicable legislation regarding financial matters, financial management and other related matters. My material findings on compliance with specific matters in key legislation, as set out in the general notice issued in terms of the PAA, are as follows:

Procurement and contract management

18. Goods and services of a transaction value above threshold prescribed by the SCM Policy were procured without inviting competitive bids, as required by Parliament SCM regulation 6(3)(e). Deviations were approved by the accounting officer even though it was not impractical to invite competitive bids, in contravention of Parliament SCM regulations 6(3) (e).

Internal control

19. I considered internal control relevant to my audit of the financial statements, annual performance report and compliance with legislation. 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.

Leadership

20. The accounting officer was not fully effective in providing oversight responsibility to ensure that there are adequate internal controls within the legislature prevent noncompliance with SCM regulation and occurrence of irregular expenditure.

43 Financial and performance management

21. There were weaknesses in the internal controls within the SCM function to ensure compliance with all applicable SCM regulations before goods and services are procured. This resulted in material non- compliance findings which gave rise to irregular expenditure.

Governance

22. Internal audit prepared a risk based internal audit plan which was approved by the audit committee. They were not effective as they reviewed the financial statement as part of their plan, however there were material misstatements identified during the external audit.

East London 29 July 2016

Human Resource Management

Service Delivery Table 1.1 – Main services provided and standards Main services Actual customers Potential customers Standard of service Actual achievement against standards Management and MPLs, all staff members and MPLs and Staff members Ensure effective and efficient Integrated Human Resource implementation of NEHAWU and NEHAWU implementation and Management policies implemented Integrated Human management of IHRM policies Resource Management policies Recruitment and selection All staff members and Employees Ensure that all budgeted vacant 13 posts have been filled. applicants posts are filled.

Management of MPLs and staff members MPLs and Staff members Ensure effective and efficient Conditions of service for MPLs and conditions of service implementation of all employees’ staff have been implemented

46 and MPLs’ conditions of service. effectively and sufficiently Human Resource MPLs, staff members and MPLs and all staff members Training of MPLs and all levels of Training of MPLs and staff members Development interns staff members in all levels has been implemented.

Development, review and MPLs and staff members MPLs and Staff members Ensure that all policies are All HR policies have been implementation of all HR developed, reviewed and implemented Policies implemented

Table 1.2 – Consultation arrangements with customers Type of arrangement Actual Customers Potential Customers Actual achievements General meetings with staff members and Employees and Organised Labour, staff members and Meetings with organised Labour and staff members management employers managers when need arises Education and awareness programmes All staff members Organised Labour, staff members and Wellness programmes managers Table 1.3 – Service delivery access strategy Access Strategy Actual achievements Consultation with Managers, organised labour, Executive Consultations between managers, organised labour, Executive Committee and Rules Committee on Committee and Rules Committee on policy development policy development has taken place

Table 1.4 – Service information tool Types of information tool Actual achievements

Human Resource Plan Development of the HR Plan for 2015-2019

Table 1.5 – Complaints mechanism Complaints Mechanism Actual achievements Labour Relations, Secretariat and Legal unit Complaints are channelled through Employee Relations Office and investigated for substance. In the event that they are referred for enquiry Legal Unit is required to lead the evidence.

Expenditure 47 TABLE 2.1 – Personnel costs by programme, 2015/16 Programme Total Voted Personnel Expenditure Training Expenditure Personnel cost as a % of Average personnel cost Employment Expenditure (R’000) (R’000) (R’000) total expenditure per employee (R’000) Programme 1 160 573 100 126 3008 63.6 610 164 Programme 2 131 528 31 012 0 22.8 516 60 Programme 3 122 717 71 150 0 62.8 837 85 Members 59 411 61 264 0 98.4 1178 52 Total 474229 263 552 3008 55.6 730 361

TABLE 2.2 – Personnel costs by salary bands, 2015/16 Salary bands Personnel Expenditure (R’000) % of total personnel cost Average personnel cost per employee (R’) Interns 1093 0.2 64 294 Lower skilled (Grade 2-5) 14557 3.1 291 140 Skilled (Grade 6-8) 19035 4 464 268 Highly skilled production (Grade 9-12) 111074 23.4 104 868 Management (Grade 14-22) 56 529 11.9 1 413 225 Total 202 288 55.1 560 This is inclusive of Support staff to MPLs and Interns TABLE 2.3 – Salaries, Overtime, Home Owners Allowance and Medical Assistance by programme, 2015/16 Salaries Overtime Home Owners Allowance Medical Assistance Amount (R’000) Salaries as a % Amount Overtime as a % Amount (R’000) HOA as a % of Amount (R’000) Medical Programme of personnel (R’000) of personnel cost personnel cost Assistance as a % cost of personnel cost Programme 1 88669 88.4 423 0.4 6696 6.9 4340 4.3 Programme 2 28263 90.7 0 0 1451 5.1 1299 4.2 Programme 3 64067 89.6 31 0.001 3387 5.2 3667 5.2 Total 180999 89.2 454 0.2 11534 6 9306 4.6 This is inclusive of Support staff to MPLs

TABLE 2.4 – Salaries, Overtime, Home Owners Allowance and Medical Assistance by salary bands, 2015/16

Salaries Overtime Home Owners Allowance Medical Assistance Salaries as a % Medical Assistance Salary Bands Amount Amount Overtime as a % of HOA as a % of of personnel Amount (R’000) Amount (R’000) as a % of personnel (R’000) (R’000) personnel cost personnel cost cost cost

48 Interns 1093 100 0 0 0 0 0 0 Lower skilled 10687 73.4 45 0.3 2042 14 1783 12.2 (Grade 2-5) Skilled (Grade 6-8) 14167 74.4 283 1.5 2704 14.2 1881 9.9 Highly skilled 102010 91.8 126 0.1 4797 4.3 4146 3.7 production (Grade 9-12) Management 53042 93.8 0 0 1991 3.5 1496 2.6 (Grade 14-22) Total 180999 89.5 454 0.2 11534 5.7 9306 4.6 This is inclusive of Support staff to MPLs and Interns Employment and vacancies TABLE 3.1 – Employment and vacancies by programme, 31 March 2016 Number of posts filled additional Programme Number of posts Number of posts filled Vacancy Rate to the establishment Administration 383 254 33.7 0 Public offices (Support Staff) 55 55 0 55 Remuneration of elected public 52 52 0 52 representatives Total 489 361 26.2 107 NB: This number is inclusive of Political Office Bearers and the support staff to MPLs TABLE 3.2 – Employment and vacancies by critical occupation, 31 March 2016 Number of posts filled additional Salary band Number of posts Number of posts filled Vacancy Rate to the establishment Lower skilled (Grade 1-5) 126 67 46.8 0 Skilled (grade 6-8) 73 41 43.8 0 49 Highly skilled production 137 106 22.6 0 (Grade 9-12) Highly skilled supervision 43 37 14 0 (Grade 13-17) Senior management (Grade 18-21) 4 3 25 0 Total 383 254 33.7 0

TABLE 3.3 – Employment and vacancies by salary band, 31 March 2016 Number of posts filled additional Critical occupations Number of posts Number of posts filled Vacancy Rate to the establishment Grade 19-21 4 3 25 0 Grade 13-17 43 37 14 0 Grade 9-12 137 106 22.6 0 Grade 6-8 73 41 43.8 0 Grade 1-5 126 67 46.8 0 Total 383 254 33.7 0 Job evaluation TABLE 4.1 – Job Evaluation, 1 April 2015 to 31 March 2016 Posts Upgraded Posts downgraded Number of Number of Jobs % of posts evaluated Salary band % of posts % of posts posts Evaluated by salary bands Number Number evaluated evaluated Lower skilled (Grade 1-5) 126 0 0 0 0 0 0 Skilled (Grade 6-8) 73 0 0 0 0 0 0 Highly skilled production (Grade 9-12) 137 0 0 0 0 0 0 Highly skilled supervision (Grade 13-17) 43 0 0 0 0 0 0 Senior Management Service (Grade 18-21) 4 0 0 0 0 0 0 Total 383 0 0 0 0 0 0

TABLE 4.2 – Profile of employees whose salary positions were upgraded due to their posts being upgraded, 1 April 2015 to 31 March 2016 Beneficiaries African Asian Coloured White Total Female 0 0 0 0 0

50 Male 0 0 0 0 0 Total 0 0 0 0 0 Employees with a disability 0 0 0 0 0

TABLE 4.3 – Employees whose salary level exceed the grade determined by job evaluation, 1 April 2015 to 31 March 2016 (in terms of PSR 1.V.C.3) Occupation Number of employees Job evaluation level Remuneration level Reason for deviation Administration Officer 0 0 0 0 Senior Admin Officer 0 0 0 0 Secretary 0 0 0 0 Accountant 0 0 0 0 Total Number of Employees whose salaries 0 0 0 0 exceeded the level determined by job evaluation in 2008/09 Percentage of total employment 0 0 0 0 TABLE 4.4 – Profile of employees whose salary level exceed the grade determined by job evaluation, 1 April 2015 to 31 March 2016 (in terms of PSR 1.V.C.3) Beneficiaries African Asian Coloured White Total Female 0 0 0 0 0 Male 0 0 0 0 0 Total 0 0 0 0 0

Employment changes TABLE 5.1 – Annual turnover rates by salary band for the period 1 April 2015 to 31 March 2016 Employment at Beginning of Salary Band Appointments Terminations Turnover rate Period (April 2015) Lower skilled (Grade s1-5) 69 1 3 4.3 Skilled (Grade 6-8) 42 4 3 7.1 Highly skilled production(Grades 9-12) 111 3 7 6.3 Highly skilled supervision(Grades 13-17) 37 3 1 2.7 Senior Management (Grades 18-22) 3 2 1 33.3 Total 262 13 15 5.7 51

TABLE 5.2 – Annual turnover rates by critical occupation for the period 1 April 2015 to 31 March 2016 Occupation: Number of employees per occupation as Appointments Terminations on 1 April 2015 Top Management 3 2 1 General Managers 7 2 0 Researchers 17 0 0 Total 27 4 1 Table 5.3 – Reasons why staff are leaving the Legislature Termination Type Number % of total Death 4 26.7 Resignation 6 40 Expiry of contract 2 13.3 Dismissal – operational changes 0 0 Dismissal – misconduct 1 6.7 Dismissal – inefficiency 0 0 Discharged due to ill-health 0 0 Retirement 2 13.3 Transfers to other Public Service Departments 0 0 Other 0 0 Total 15 100

Table 5.4 – Promotions by critical occupation Salary level 52 Employees as at 1 Promotions to another promotions as a % Progressions to another Notch progressions as a % of Occupation April 2015 salary level of employees by notch within a salary level employees by occupation occupation Top Management 3 1 33.3 0 0 General Managers 7 0 0 0 0 Committee 20 0 0 11 55% Coordinators Researchers 17 1 5.9 10 59% Total 47 2 4.3 21 44.6 Table 5.5 – Promotions by salary band Promotions to Salary bands promotions Progressions to another Notch progressions as Employees Salary Band another salary as a % of employees by notch within a salary a % of employees by 1 April 2015 level salary level level salary band Lower skilled (Grades1-5) 69 0 0 42 60.9 Skilled (Grade 6-8) 42 2 4.8 28 66.7 Highly skilled production (Grades 9-12) 111 2 1.8 64 57.7 Highly skilled supervision (Grades 14-17) 37 1 2.7 10 27 Senior management (Grades 19-22) 3 1 33.3 0 0 Total 262 6 2.3 144 55

Employment equity

6.1 – Total number of employees (including employees with disabilities) in each of the following occupational categories as on 31 March 2016 Male Female Occupational categories (SASCO) Total Total 53 African Coloured Indian White African Coloured Indian White Total Blacks Blacks Executive Management (Secretariat) 1 0 0 1 0 2 0 0 2 0 3 Top Management (General Manager) 7 1 0 8 0 1 0 0 1 0 9 Professionally qualified and 10 0 0 10 1 15 1 0 16 1 28 experienced specialists and mid- management Skilled Technical and academically 41 2 0 43 0 60 0 0 60 3 106 qualified workers, middle management, supervisors, foremen, and superintendent Semi-skilled and discretionary decision 22 1 0 23 0 36 3 0 39 0 62 making Unskilled and defined decision making` 14 0 0 14 0 32 0 0 32 0 46 95 4 0 99 1 146 4 0 150 4 254 6.2 – Total number of employees (including employees with disabilities) in each of the following occupational bands as on 31 March 2016 Male Female Occupational Bands Total African Coloured Indian Total White African Coloured Indian Total White Blacks Blacks Executive Management (Secretariat) 1 0 0 1 0 2 0 0 2 0 3 Top Management (General Managers) 7 1 0 8 0 1 0 0 1 0 9 Professionally qualified and experienced specialists and mid- 10 0 0 10 1 15 1 0 16 1 28 management Skilled Technical and academically qualified workers, middle 41 2 0 43 0 60 0 0 60 3 106 management, supervisors, foremen, and superintendent 22 1 0 23 0 36 3 0 39 0 62 Semi-skilled and discretionary decision making Unskilled and defined decision making` 14 0 0 14 0 32 0 0 32 0 46 TOTAL 95 4 0 99 1 146 4 0 150 4 254

6.3 – Recruitment for the period 1 April 2015 to 31 March 2016 Male Female 54 Occupational Bands Total Total Total African Coloured Indian White African Coloured Indian White Blacks Blacks Executive Management (Secretariat) 0 0 0 0 0 1 0 0 1 0 1 Top Management (General Manager) 1 0 0 1 0 0 0 0 0 0 1 Professionally qualified and experienced specialists and mid- 0 0 0 0 0 0 0 0 0 0 0 management Skilled Technical and academically qualified workers, middle 0 0 0 0 0 0 0 0 0 0 0 management, supervisors, foremen, and superintendent Semi-skilled and discretionary decision making 2 0 0 2 0 0 2 0 2 0 4 Unskilled and defined decision making` 0 0 0 0 0 1 0 0 1 0 1 TOTAL 3 0 0 3 0 2 2 0 4 0 7 6.4 – Promotions for the period 1 April 2015 to 31 March 2016 Male Female Occupational Bands Total Total Total African Coloured Indian White African Coloured Indian White Blacks Blacks Executive Management (Secretariat) 1 0 0 1 0 0 0 0 0 0 1 Top Management (General Manager) 0 0 0 0 0 0 0 0 0 0 0 Professionally qualified and experienced specialists and mid- 1 0 0 1 0 0 0 0 0 0 1 management Skilled Technical and academically qualified workers, middle 1 0 0 1 0 1 0 0 1 0 2 management, supervisors, foremen, and superintendent Semi-skilled and discretionary decision making 0 0 0 0 0 2 0 0 2 0 2 Unskilled and defined decision making` 0 0 0 0 0 0 0 0 0 0 0 TOTAL 3 0 0 3 0 3 0 0 3 0 6

6.5 – Terminations for the period 1 April 2015 to 31 March 2016 Male Female 55 Occupational Bands African Coloured Indian Total White African Coloured Indian Total White Total Blacks Blacks Executive Management (Secretariat) 1 0 0 1 0 0 0 0 0 0 1 Top Management (General Manager) 0 0 0 0 0 0 0 0 0 0 0 Professionally qualified and experienced specialists and 1 0 0 1 0 0 0 0 0 0 1 mid-management Skilled Technical and academically qualified workers, 3 0 0 3 0 4 0 0 4 0 7 middle management, supervisors, foremen, and superintendent Semi-skilled and discretionary decision making 1 0 0 1 0 0 1 0 1 1 3 Unskilled and defined decision making 1 1 0 2 0 1 0 0 1 0 3 TOTAL 7 1 0 8 0 5 1 0 2 1 15

6.6 – Disciplinary action for the period 1 April 2015 to 31 March 2016 Male Female Description African Coloured Indian White African Coloured Indian White Total Disciplinary action 3 0 0 0 1 0 0 0 4 6.7 – Skills development for the period 1 April 2015 to 31 March 2016 Male Female Occupational categories Total African Coloured Indian White African Coloured Indian White Legislators, senior officials and managers 11 1 0 0 0 1 0 0 13 Professionals 2 0 0 0 6 0 0 0 8 Technicians and associate professionals 0 0 0 0 0 0 0 0 0 Clerks 7 0 0 0 9 0 0 0 16 Service and sales workers 0 0 0 0 0 0 0 0 0 Total 20 1 0 0 15 1 0 0 37 Employees with disabilities 0 0 0 0 0 0 0 0 0

Performance rewards TABLE 7.1 – Performance Rewards by race, gender, and disability, 1 April 2015 to 31 March 2016 Beneficiary Profile Cost Description Number of beneficiaries Total no of employees in group % of total within group Cost (R’000) Average cost per employee African Female 176 182 97 3 444 19 569 56 Male 110 110 100 3 768 34 253 Asian Female 0 0 0 0 Male 0 0 0 0 Coloured Female 7 7 100 110 16 814 Male 8 8 100 216 27 100 White Female 8 8 100 296 36 947 Male 1 1 100 20 20 014 Employees with a disability Total 310 310 71,9 4 109 14 996

NB The beneficiaries of Performance Rewards include Support staff to MPLs TABLE 7.2 – Performance Rewards by salary bands for personnel below Senior Management Service, 1 April 2015 to 31 March 2016 Salary Bands Beneficiary Profile % of total within salary Average cost per Number of beneficiaries Number of employees Total Cost (R’000) bands employee Lower skilled (Grades 1-5) 71 71 100 983 16 946 Skilled (Grades 6-8) 76 82 93 1 593 20 960 Highly skilled production 121 121 100 3 057 28 985 (Grades 9-12) Total 6 083 NB The beneficiaries of Performance Rewards include Support staff to MPLs

TABLE 7.3 – Performance related rewards (cash bonus), by salary band, for Senior Management Service Beneficiary Profile Total Cost Average cost per Salary Band Number of beneficiaries Number of employees % of total within band (R’000) employee 14-17 37 37 100 1607 41 193 19-22 3 3 100 172 57 404 57

Total 40 40 100 1 779 42 350 NB The beneficiaries of Performance Rewards include Support staff to MPLs Foreign workers TABLE 8.1 – Foreign Workers, 1 April 2015 to 31 March 2016, by salary band 1 April 2015 31 March 2016 Change Salary Band Number % of total Number % of total Number % change Lower skilled (Grades 1-5) 0 0 0 0 0 0 Skilled (Levels 6-8) 0 0 0 0 0 0 Highly skilled production (Grades 9-12) 0 0 0 0 0 0 Highly skilled supervision (Grades 13-17) 0 0 0 0 0 0 Senior management (Grades 18-22) 0 0 0 0 0 0 Total 0 0 0 0 0 0

TABLE 8.2 – Foreign Worker, 1 April 2015 to 31 March 2016, by major occupation 1 April 2015 31 March 2016 Change Major Occupation Number % of total Number % of total Number % change General Manager 0 0 0 0 0 0

58 Researcher 0 0 0 0 0 0 Total 0 0 0 0 0 0

Leave utilisation for the period 1 January 2015 to 31 December 2015 TABLE 9.1 – Sick leave, 1 January 2015 to 31 December 2015 % days with Number of % of total Total Number of days Total Average days per Estimated Cost Salary Band medical Employees employees using with medical days employee (R’000) certification using sick leave sick leave certificate

Lower skilled (Grades 1-5) 545 90.3 52 74.3 10 425 70 Skilled (Grades 6-8) 356 81.5 38 82.6 9 389 46 Highly skilled production 823 84.9 93 85.3 9 1515 109 (Grades 9-12) Highly skilled supervision 133 65.4 27 71.1 5 355 38 (Grades14-17) Senior management 12 100 1 33.3 12 43 3 (Grades 18-22) Total 1 869 84.5 211 79.3 9 2 727 266 TABLE 9.2 – Disability leave (temporary and permanent), 1 January 2015 to 31 December 2015 % days with Number of % of total Total days Average days Estimated Cost Salary Band medical Employees using employees using taken per employee (R’000) certification disability leave disability leave Lower skilled (Grades 1-5) 0 0 0 0 0 0 Skilled (Grades 6-8) 0 0 0 0 0 0 Highly skilled production (Grades 9-12) 0 0 0 0 0 0 Highly skilled supervision (Grades 13-17) 0 0 0 0 0 0 Senior management (Grades 18-22) 0 0 0 0 0 0 Total 0 0 0 0 0 0

TABLE 9.3 – Annual Leave, 1 January 2015 to 31 December 2015 Number of employees who Salary Bands Total days taken Average per employee took leave

Lower skilled (Grades 1-5) - 2501 36 68 Skilled (Grades 6-8) - 1 457 36 40 59 Highly skilled production (Grades 9-12) 3 903 35 111 Highly skilled supervision (Grades 14-17) 1 311 35 38 Senior management (Grades 19-22) 101 34 3 Total - 9 273 36 260

TABLE 9.4 – Capped leave, 1 January 2015 to 31 December 2015 Average Average capped Number of Total number of Number of Total days of number of leave per employee employees who capped leave Employees as at Salary Bands capped leave days taken per as at 31 December took capped available at 31 31 December taken employee 2015 leave December 2015 2015 Lower skilled (Grades 1-5) 0 0 21 0 1 438 68 Skilled (Grades 6-8) 0 0 17 0 781 40 Highly skilled production (Grades 9-12) 0 0 24 0 2 609 111 Highly skilled supervision (Grades 13-17) 0 0 19 0 734 38 Senior management (Grades 18-21) 0 0 13 0 40 3 Total 0 0 21 0 5602 260 TABLE 9.5 – Leave pay-outs for the period 1 January 2015 to 31 December 2015 The following table summarises payments made to employees as a result of leave that was not taken. REASON Total Amount (R’000) Number of Employees Average payment per employee Capped leave pay-outs on termination of service for 2015/16 504 11 45 818 Current leave pay-out on termination of service for 2015/16 601 11 54 636 Total 1105 11 100 455

HIV and AIDS & health promotion programmes TABLE 10.1 – Steps taken to reduce the risk of occupational exposure Units/categories of employees identified to be at high risk of contracting HIV & Key steps taken to reduce the risk related diseases (if any) None None

TABLE 10.2 – Details of Health Promotion and HIV and AIDS Programmes (tick the applicable boxes and provide the required information) 60 Question Yes No Details, if yes 1. Has the Legislature designated a member of the SMS to introduce appropriate Yes Ms Mbutuma : Senior Manager: Special programmes education, awareness and prevention programmes on HIV/AIDS and other sexually transmitted infections for the employees in the institution and, where possible, their families, and as far as possible, integrate those programmes with programmes that promote the health and well-being of employees? If so, provide her/his name and position. 2. Does the Legislature have a dedicated unit or has it designated specific staff members Yes 1 3 staff Members to promote the health and wellbeing of your employees? If so, indicate the number of 2 R500 000 employees who are involved in this task and the annual budget that is available for this purpose. 3. Has the Legislature introduced an Employee Assistance or Health Promotion Yes Careways is a contracted Counselling Service Provider; Programme for your employees? If so, indicate the key elements/services of this there is s sport and recreational activities for MPLs and Programme. staff members; there are trained peer educators. Lifestyle education and awareness sessions are run including stress management Question Yes No Details, if yes 4. Has the Legislature established an HIV/AIDS committee for the Legislature with Yes No, there is a health and safety committee and reps adequate representation and support from all relevant stakeholders, including trade union representatives? If so, please provide the names of the members of the committee and the stakeholder(s) that they represent. 5. Has the Legislature reviewed its employment policies and practices to ensure that The HIV & AIDS policy was reviewed to include MPLs; an these do not unfairly discriminate against employees on the basis of their HIV status? accident insurance is currently being procured which If so, list the employment policies/practices so reviewed. No includes risks of getting HIV infected 6. Has the Legislature introduced measures to protect HIV-positive employees or those Yes perceived to be HIV-positive from discrimination? If so, list the key elements of these measures. 7. Does the Legislature encourage its employees to undergo Voluntary Counselling and Yes Wellness days and HIV Testing. Disclosure campaigns are Testing? If so, list the results that you have you achieved. done to reduce stigma

8. Has the Legislature developed measures/indicators to monitor & evaluate the impact No

61 of its health promotion programme? If so, list these measures/indicators.

Labour relations The following collective agreements were entered into with trade unions within the Legislature. TABLE 11.1 – Collective agreements, 1 April 2015 to 31 March 20165 Subject Matter Date Substantive Agreement 02 April 2015 TABLE 11.2 – Misconduct and disciplinary hearings finalised, 1 April 2015 to 31 March 2016 Outcomes of disciplinary hearings Number % of total Correctional counselling 0 Verbal warning 0 Written warning 0 Final written warning 1 Suspended without pay 0 Fine 0 Demotion 0 Dismissal 1 Not guilty 0 Case withdrawn 0 Total 2

62 TABLE 11.3 – Types of misconduct addressed at disciplinary hearings Type of misconduct Number % of total Gross negligence 0 Dishonesty 3 Absenteeism 1 Criminal conviction 0 Verbal Assault 0 Total 4

TABLE 11.4 – Grievances lodged for the period 1 April 2015 to 31 March 2016 Description Number % of Total Number of grievances resolved 3 Number of grievances not resolved 5 Total number of grievances lodged 8 TABLE 11.5 – Disputes lodged with Councils for the period 1 April 2015 to 31 March 2016 Description Number % of Total Number of disputes upheld/ continuing 0 0 Number of disputes dismissed/ Resolved 1 100 Total number of disputes lodged 1 100

TABLE 11.6 – Strike actions for the period 1 April 2015 to 31 March 2016 Total number of person working days lost Number Total cost (R’000) of working days lost 0 Amount (R’000) recovered as a result of no work no pay 0

TABLE 11.7 – Precautionary suspensions for the period 1 April 2015 to 31 March 2016 Number of people suspended 4 Number of people whose suspension exceeded 30 days 4 Average number of days suspended 548

63 Cost (R’000) of suspensions R1 538 Skills development This section highlights the efforts of the Legislature with regard to skills development. 12.1 – Training needs identified 1 April 2015 to 31 March 2016 Number of Training needs identified at start of reporting period Occupational Gender employees as at Skills Programmes & Other forms of Categories Learnerships Total 31 March 2016 other short courses training Legislators, senior Female 2 0 1 10 11 officials and managers Male 1 0 1 11 12 Professionals Female 1 0 3 4 7 Male 8 0 1 2 3 Technicians and Female 17 0 0 0 0 associate professionals Male 11 0 0 0 0 Clerks Female 63 0 0 0 0 Male 43 0 0 0 0 Service and sales Female 39 0 0 0 0 workers Male 23 0 0 0 0

64 Elementary Female 32 0 0 0 0 occupations Male 14 0 0 0 0 Sub Total Female 154 0 7 15 22 Male 100 0 5 15 20 Total 254 0 12 30 42 12.2 – Training provided 1 April 2015 to 31 March 2016 Number of Training provided within the reporting period employees as Occupational Categories Gender at 31 March Skills Programmes & Other forms of Learnerships Total 2016 other short courses training Legislators, senior officials and managers Female 2 0 1 10 11 Male 1 0 1 11 12 Professionals Female 1 0 0 6 6 Male 8 0 0 2 2 Technicians and associate professionals Female 17 0 0 0 0 Male 11 0 0 0 0 Clerks Female 63 0 0 0 0 Male 43 0 0 0 0 Service and sales Female 39 0 0 0 0 workers Male 23 0 0 0 0

Elementary occupations Female 32 0 0 0 0 65 Male 14 0 0 0 0 Sub Total Female 154 0 4 22 26 Male 100 0 4 17 21 Total 254 0 8 39 47

Injury on duty The following tables provide basic information on injury on duty. TABLE 13.1 – Injury on duty, 1 April 2015 to 31 March 2016 Nature of injury on duty Number % of total Required basic medical attention only 3 100 Temporary Total Disablement 0 0 Permanent Disablement 0 0 Fatal 0 0 Total 3 100 Utilisation of consultants Table 14.1(a) – Report on consultant appointments using appropriated funds

Total number of consultants that Duration: Contract value in Project Title worked on the project Work days Rand Grading of posts 1 0 R346 975 Organogram review 0 0 0

Table 14.1(b) – Report on consultant appointments using appropriated funds Total duration: Total number of projects Total individual consultants Total contract value in Rand Work days 1 1 22 346 975

Table 14.2 – Analysis of consultant appointments using appropriated funds, in terms of Historically Disadvantaged Individuals (HDIs) Percentage ownership by HDI Percentage management by HDI Number of Consultants from HDI groups that

66 Project Title groups groups work on the project N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Table 14.3(a) – Report on consultant appointments using Donor funds Total Number of consultants Duration: Project Title Donor and Contract value in Rand that worked on the project Work days N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Table 14.3 (b)– Report on consultant appointments using Donor funds Total duration: Total number of projects Total individual consultants Total contract value in Rand Work days N/A N/A N/A N/A N/A N/A N/A N/A

Table 14.4 – Analysis of consultant appointments using Donor funds, in terms of Historically Disadvantaged Individuals (HDIs) Project Title Percentage ownership by HDI Percentage management by HDI Number of Consultants from HDI groups that groups groups work on the project N/A N/A N/A N/A N/A N/A N/A N/A 67

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

General Information

Legal form of entity Provincial Legislature

Nature of business and principal activities The main services offered by the Eastern Cape Provincial Legislature are as follows: • Sustain a legislative process that produces good and just laws • Provide support for vigorous oversight of the Executive • Provide an enabling environment for Members to be effective • Effective, efficient and economical management of resources • Ensure good governance • Effective and meaningful public participation, education and awareness.

The Administration of the Provincial Legislature, in support of this, provides an enabling environment for Members to achieve their constitutional objectives.

Speaker Kiviet N

Deputy Speaker Tunyiswa B

Chief Whip Mrara M

Secretary Mapolisa VW

Chief Financial Officer Ntisana P

Chief Parliamentary Officer Mene N

Business address Independence Avenue Bhisho 5605

Postal address Private Bag X0051 Bhisho 5605

Bankers First National Bank, a division of FirstRand Bank Limited

Auditors Auditor-General of South Africa

70 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

Accounting Officer's Responsibilities and Approval

The Secretary is required by the Financial Management of Parliament and Provincial Legislatures Act 10 of 2009 (FMPPLA), to maintain adequate accounting records and is responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is the responsibility of the Secretary to ensure that the annual 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 express an independent opinion on the annual financial statements and were given unrestricted access to all financial records and related data.

The annual 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 and transitional arrangements.

The annual financial statements are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The three (3) spheres of government, namely, the Legislatures, the Executives and the Judiciary operate independently in terms of the Constitution of the Republic of South Africa of 1996. In compliance with the Constitution, the Legislative sector has enacted its own financial management act known as the Financial Management of Parliament and Legislatures Act, Act No. 10 of 2009, as amended (FMPPLA). Parliament and Legislatures have opted out of the PFMA, an Act that governs financial management of the departments, with effect from 1st April 2015. The legislatures are preparing to acquire an Integrated Financial Management system to fully implement FMPPLA by 1st April 2018.

The Secretary 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. To enable the Secretary to meet these responsibilities, management sets standards for internal control aimed at reducing the risk of error or losses 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 Secretary 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 annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement.

The annual financial statements set out on pages 72 to 138, which have been prepared on the going concern basis, were approved by the Secretary on 31 May 2016:

VW Mapolisa Secretary to the Legislature

71 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

Statement of Financial Position as at 31 March 2016

2016 2015 Restated* Note(s) R '000 R '000

Assets Current Assets Cash and cash equivalents 3 10 465 24 775 Receivables from exchange transactions 4 606 847 Inventories 5 199 - 11 270 25 622

Non-Current Assets Property, plant and equipment 6 47 245 43 081 Intangible assets 7 767 435 Heritage assets 8 272 272 48 284 43 788 Total Assets 59 554 69 410

Liabilities Current Liabilities Payables from exchange transactions 9 33 930 28 508 Payables from non-exchange transactions 10 5 382 68 Operating lease liability 11 83 98 Provisions 12 10 101 9 734 Employee benefit obligation 13 953 1 430 50 449 39 838

Non-Current Liabilities Employee benefit obligation 13 6 630 4 723 Total Liabilities 57 079 44 561 Net Assets 2 475 24 849 Accumulated surplus 2 475 24 849

72 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

Statement of Financial Performance 2016 2015 Restated* Note(s) R '000 R '000

Revenue Revenue from exchange transactions Interest received 15 224 148 Sundry income 16 181 258 Total revenue from exchange transactions 405 406

Revenue from non-exchange transactions Transfer revenue Appropriation 17 451 399 455 468 Public contributions and donations 18 - 75 Service in-kind revenue 7 924 - Total revenue from non-exchange transactions 459 323 455 543 Total revenue 14 459 728 455 949

Expenditure Employee related costs 19 (269 784) (249 880) Allowance for credit losses 20 416 (56) Transfers and subsidies 21 (98 272) (98 062) Finance costs 13 (555) (458) Loss on disposal of assets (758) (4 351) General expenses 22 (107 932) (93 117) Contracted services 24 (5 217) (1 211) Total expenditure (482 102) (447 135) (Deficit) surplus for the year (22 374) 8 814

73 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

Statement of Changes in Net Assets Accumulated Total net surplus assets

R '000 R '000

Opening balance as previously reported 12 006 12 006 Adjustments Correction of errors (refer to note 27) 1 117 1 117 Change in accounting policy (refer to note 28) 2 912 2 912 Balance at 01 April 2014 as restated* 16 035 16 035 Changes in net assets Surplus for the year 8 814 8 814 Total changes 8 814 8 814 Restated Balance at 01 April 2015* 24 849 24 849

Changes in net assets Deficit for the year (22 374) (22 374) Total changes (22 374) (22 374) Balance at 31 March 2016 2 475 2 475

74 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

Cash Flow Statement 2016 2015 Restated* R '000 N R '000 o t Cash flows from operating activities e ( Receipts s Departmental revenue received 347) 850 Appropriation 451 399 455 468 Interest income 168 143 451 914 456 461

Payments Employee costs (261 721) (243 262) Suppliers (100 990) (92 273) Transfers and subsidies (98 272) (98 062) (460 983) (433 597) Net cash flows from operating activities (9 069)2 22 864 6 Cash flows from investing activities

Purchase of property, plant and equipment (4 6892) (8 849) Proceeds from sale of property, plant and equipment 6 53 163 Purchase of intangible assets 7(402) - Net cash flows from investing activities (5 241) (8 686)

Net increase/(decrease) in cash and cash equivalents (14 310) 14 178 Cash and cash equivalents at the beginning of the year 24 775 10 597 Cash and cash equivalents at 31 March 2016 10 3465 24 775

75 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 Statement of Comparison of Budget and Actual Amounts

Budget on Cash Basis Approved Adjustments Final budget Actual Difference Reference budget amounts on between final (note 37) comparable budget and basis actual

R '000 R '000 R '000 R '000 R '000 Statement of Financial Performance Revenue Revenue from exchange transactions Departmental revenue 367 - 367 515 148 37 Revenue from non-exchange transactions Transfer revenue Appropriation 436 399 37 463 473 862 473 862 - Total revenue 436 766 37 463 474 229 474 377 148

Expenditure Employee related costs (262 511) 1 848 (260 663) (263 552) (2 889) 37 Transfers and subsidies (82 449) (17 968) (100 417) (101 076) (659) 37 Payments for financial assets - (475) (475) (475) - 37 Goods and services (84 179) (22 368) (106 547) (100 990) 5 557 37 Capital expenditure (7 627) 1 500 (6 127) (6 044) 83 37 Total expenditure (436 766) (37 463) (474 229) (472 137) 2 092 Surplus before taxation - - - 2 240 2 240 Actual Amount on Comparable - - - 2 240 2 240 Basis as Presented in the Budget and Actual Comparative Statement

Reconciliation Basis difference Capital expenditure 5 307 Accrued expenditure (9 116) Rollover appropriation (22 463)

Subsequent payments- 2015 6 116 expenses

Loss on disposal of assets (758)

Employee benefits related (4 205) Accrued revenue (110) Movement in allowance for credit 41 losses

Inventory- capitalised 199 Actual Amount in the Statement of Financial Performance (22 374)

76 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

1. Presentation of Annual Financial Statements

The annual financial statements have been prepared in accordance with the Standards of Generally Recognised Accounting Practice (GRAP), including any interpretations, guidelines and directives, issued by the Accounting Standards Board.

These annual 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. They are presented in South African Rand.

All figures have been rounded to the nearest thousand Rand.

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 are disclosed below. Where a change in accounting policy has taken place as a result of the first-time adoption of GRAP, details thereof have been disclosed in the notes to the annual financial statements. Refer to note 28 - Change in accounting policies

1.1 Going concern assumption

These annual 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.

1.2 Significant judgements and sources of estimation uncertainty

In preparing the annual financial statements, management is required to make estimates and assumptions that affect the amounts represented in the annual 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 annual financial statements. Significant judgements include:

Receivables

The Legislature assesses its receivables for impairment at the end of each reporting period. In determining whether credit losses should be recorded in surplus or deficit, the Legislature makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from a financial asset.

The credit losses for receivables is calculated on a portfolio basis, based on historical loss ratios, adjusted for national and industry- specific economic conditions and other indicators present at the reporting date that correlate with defaults on the portfolio. These annual loss ratios are applied to balances in the portfolio and scaled to the estimated loss emergence period.

Other long-term employment benefits

The present value of the long service award obligation depends on a number 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 post retirement obligations.

The Legislature determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the long service award obligation. The most appropriate discount rate that reflects the time value of money is with reference to market yields at the reporting date on government bonds.

Where there is no deep market in government bonds with a sufficiently long maturity to match the estimated maturity of all the benefit payments, the Legislature uses current market rates of the appropriate term to discount shorter term payments, and estimates the discount rate for longer maturities by extrapolating current market rates along the yield curve.

77 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

Other key assumptions for long service award obligation are based on current market conditions. Additional information is disclosed in Note 13 -Employee benefits obligation.

Allowance for impairment

For receivables, credit losses is recognised in surplus and deficit when there is objective evidence that it is impaired. The impairment is measured based on the profile of each individual debtors. The debtors are classified as high risk and low risk depending with the situation assessed by management. 1.3 Property, plant and equipment

Definition Property, plant and equipment are tangible non-current assets (including infrastructure assets) that are held for use in the production or supply of goods or services, rental to others, or for administrative purposes, and are expected to be used during more than one period.

Recognition

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 or fair value of the item can be measured reliably.

Measurement

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 bring 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.

Where an item of property, plant and equipment is acquired in exchange for a non-monetary asset or monetary assets, or a combination 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.

When significant components of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently 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.

Other parts

Items such as spare parts, standby equipment and servicing equipment are recognised when they meet the definition of property, plant and equipment.

78 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

Major inspection costs which are a condition of continuing use of an item of property, plant and equipment and which meet the recognition criteria above are included as a replacement in the cost of the item of property, plant and equipment. Any remaining inspection costs from the previous inspection are derecognised.

Derecognition

Items of property, plant and equipment are derecognised when the asset is disposed of or when there are no further economic benefits 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 when the item is derecognised. 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.

Transitional provisions

The Legislature changed its accounting policy for property, plant and equipment in 2016. The change in accounting policy is made in accordance with its transitional provision as per Directive 8 of the GRAP Reporting Framework.

According to the transitional provision, the Legislature is not required to measure property, plant and equipment for reporting periods beginning on or after a date within three years following the date of initial adoption of the Standard of GRAP on Property, plant and equipment. Property, plant and equipment has accordingly been recognised at provisional amounts, as disclosed in 6. The transitional provision expires on 31 March 2018.

Until such time as the measurement period expires and property, plant and equipment is recognised and measured in accordance with the requirements of the Standard of GRAP on Property, plant and equipment, the Legislature need not comply with the Standards of GRAP on:  Presentation of Financial Statements (GRAP 1),  The Effects of Changes in Foreign Exchange Transactions (GRAP 4),  Leases (GRAP 13),  Segment Reporting (GRAP 18),  Discontinued Operations (GRAP 100)

The exemption from applying the measurement requirements of the Standard of GRAP on Property, plant and equipment implies that any associated presentation and disclosure requirements need not be complied with for property, plant and equipment not measured in accordance with the requirements of the Standard of GRAP on Property, plant and equipment.

1.4 Intangible assets

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 entity intends to do so; or  arises from binding arrangements (including rights from contracts), regardless of whether those rights are transferable or separable 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

79 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 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.

The Legislature assesses the probability of expected future economic benefits or service potential using reasonable and supportable 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. Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when:  it is technically feasible to complete the asset so that it will be available for use or sale.  there is an intention to complete and use or sell it.  there is an ability to use or sell it.  it will generate probable future economic benefits or service potential.  there are available technical, financial and other resources to complete the development and to use or sell the asset.  the expenditure attributable to the asset during its development can be measured reliably.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows or service potential. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight line basis over their useful life.

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.

Internally generated goodwill is not recognised as an intangible asset. 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. The gain or loss arising from the derecognition of intangible assets is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset.

Transitional provisions

The Legislature changed its accounting policy for intangible assets in 2016. The change in accounting policy is made in accordance with its transitional provision as per Directive 8 of the GRAP Reporting Framework.

According to the transitional provision, the Legislature is not required to measure intangible assets for reporting periods beginning on or after a date within three years following the date of initial adoption of the Standard of GRAP on Intangible assets. Intangible Assets has accordingly been recognised at provisional amounts, as disclosed in 7 - Intangible assets. The transitional provision expires on 31 March 2018. Until such time as the measurement period expires and intangible assets is recognised and measured in accordance

80 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS with the requirements of the Standard of GRAP on Intangible assets, the Legislature need not comply with the Standards of GRAP on:  Presentation of Financial Statements (GRAP 1),  The Effects of Changes in Foreign Exchange Transactions (GRAP 4),  Leases (GRAP 13),  Segment Reporting (GRAP 18),  Discontinued Operations (GRAP 100)

The exemption from applying the measurement requirements of the Standard of GRAP on Intangible assets implies that any associated presentation and disclosure requirements need not be complied with for intangible assets not measured in accordance with the requirements of the Standard of GRAP on Intangible assets.

1.5 Heritage assets

Heritage assets are assets that have a cultural, environmental, historical, natural, scientific, technological or artistic significance and are held indefinitely for the benefit of present and future generations.

Recognition

The Legislature recognises a heritage asset as an asset when it is probable that future economic benefits or service potential associated with the asset will flow to the Legislature, and the cost or fair value can be measured reliably.

Where the Legislature holds a heritage asset, but on initial recognition it does not meet the recognition criteria because it cannot be reliably measured, information on such a heritage asset is disclosed in note 8- Heritage assets.

Initial measurement

Heritage assets are initially recognised cost.

Where a heritage asset is acquired at no cost, or for a nominal cost, its cost is its fair value as at the date of acquisition.

Transfers

Transfers from heritage assets are only made when the particular asset no longer meets the definition of a heritage asset.

Transfers to heritage assets are only made when the asset meets the definition of a heritage asset.

Derecognition

The Legislature derecognises heritage asset 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 heritage assets is included in surplus or deficit when the asset is derecognised. The gain or loss arising from the derecognition of heritage assets is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the asset.

Transitional provisions

The Legislature adopted GRAP for the first time in 2016. The adoption is made in accordance with its transitional provisions as per Directive 8 of the GRAP Reporting Framework.

81 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

According to the transitional provisions, the Legislature is not required to measure heritage assets for reporting periods beginning on or after a date within three years following the date of initial adoption of the Standard of GRAP on Heritage assets. Heritage assets have accordingly been recognised at provisional amounts, as disclosed in note 8. The transitional provisions expires on 31 March 2018.

Until such time as the measurement period expire on 31 March 2018 and heritage assets is recognised and measured in accordance with the requirements of the Standard of GRAP on Heritage assets, the Legislature need not comply with the Standards of GRAP on (to the extent that these Standards prescribe requirements for heritage assets):

 Presentation of Financial Statements (GRAP 1);  The Effects of Changes in Foreign Exchange Transactions (GRAP 4);  Leases (GRAP 13);  Segment Reporting (GRAP 18);  Discontinued Operations (GRAP 100).

The exemption from applying the measurement requirements of the Standard of GRAP on Heritage assets implies that any associated presentation and disclosure requirements need not be complied with for heritage assets not measured in accordance with the requirements of the Standard of GRAP on Heritage assets.

1.6 Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or a residual interest of another entity.

Classification

The Legislature has the following types of financial assets (classes and category) as reflected on the face of the statement of financial position or in the notes thereto:

Class Category Receivables from 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 transactions Financial liability measured at amortised cost Payables from 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 becomes 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

82 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

The Legislature measures a financial asset and financial liability, other than those subsequently measures at fair value, initially at its fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

The Legislature measures all other financial assets and financial liabilities initially at fair value.

1.6 Financial instruments

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.

The amortised cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition minus principal repayments, plus or minus the cumulative amortisation using the effective interest method 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 in the case of a financial asset.

Fair value measurement considerations

The best evidence of fair value is quoted prices in an active market. If the market for a financial instrument is not active, the Legislature establishes fair value by using a valuation technique. The objective of using a valuation technique is to establish what the transaction price would have been on the measurement date in an arm’s length exchange motivated by normal operating considerations. Valuation techniques include using recent arm’s length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis and option pricing models. If there is a valuation technique commonly used by market participants to price the instrument and that technique has been demonstrated to provide reliable estimates of prices obtained in actual market transactions, the Legislature uses that technique. The chosen valuation technique makes maximum use of market inputs and relies as little as possible on Legislature-specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Periodically, the Legislature calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (i.e. without modification or repackaging) or based on any available observable market data.

Short-term receivables and payables are not discounted where the initial credit period granted or received is consistent with terms used in the public sector, either through established practices or legislation.

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

83 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 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.

For amounts due to the Legislature, external debtors such as ex-employees and accounts older than 60 days are all considered indicators of impairment.

Financial assets measured at amortised cost:

Receivables are assessed for impairment at year end. Significant receivables are individually assessed and the remaining receivables are grouped based on risk categories and then assessed for impairment. The carrying amount of receivables impaired is reduced 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 credit loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised credit loss is reversed by adjusting an allowance account. The reversal does not result in a carrying amount of the receivable 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.

Where receivables are impaired through the use of an allowance account, the amount of the loss is recognised in surplus or deficit within operating expenses. When such receivables are written off, the write off is made against the relevant allowance account. Subsequent recoveries of amounts previously written off are credited against operating expenses.

Financial assets measured at cost:

If there is objective evidence that an credit 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 credit 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 credit losses are not reversed.

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 Legislature: - derecognises the asset; and - recognises separately any rights and obligations created or retained in the transfer.

84 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

The carrying amount of the transferred asset is allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. Newly created rights and obligations are measured at their fair values at that date. Any difference between the consideration received and the amounts recognised and derecognised is recognised in surplus or deficit in the period of 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 extinguished - i.e. when the obligation specified in the contract is discharged, cancelled, expires or waived.

An exchange between an existing borrower and lender of debt instruments with substantially different terms is accounted for as having extinguished the original financial liability and a new financial liability is recognised. Similarly, a substantial modification of the terms of an existing financial liability or a part of it is accounted for as having extinguished the original financial liability and having recognised a new financial liability.

The difference between the carrying amount of a financial liability (or part of a financial liability) extinguished or transferred to another 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).

1.7 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. A lease is classified as an operating lease if it does not transfer substantially all the risks and rewards incidental to ownership.

When a lease includes both land and building elements, the Legislature assesses the classification of each element separately. 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.

The aggregate benefit of incentives is recognised as a reduction of rental expense over the lease term on a straight- line basis over the lease term.

Any contingent rents are recognised separately as an expense in the period in which they are incurred.

1.8 Inventories

Inventories are initially measured at cost except where inventories are acquired at no cost, or for a nominal cost, and then their costs are their fair value as at the date of acquisition.

85 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

Inventories are measured at the lower of cost and current replacement cost where they are held for:

 distribution at no charge or for a nominal charge; or  consumption in the production process of goods to be distributed at no charge or for a nominal charge.

Current replacement cost is the cost the Legislature incurs to acquire the asset on the reporting date.

The cost of inventories comprises of all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated for specific projects is assigned using specific identification of the individual costs.

The cost of inventories is assigned using the first-in, first-out (FIFO) formula. The same cost formula is used for all inventories having a similar nature and use to the Legislature.

When inventories are utilised, the carrying amounts of those inventories are recognised as an expense in the period in which the goods are distributed, or related services are rendered. The amount of any write-down of inventories to current replacement cost and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in current replacement cost, are recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

Transitional provisions

The Legislature changed its accounting policy for inventories in 2016. The change in accounting policy is made in accordance with its transitional provision as per Directive 8 of the GRAP Reporting Framework.

According to the transitional provisions for the Standard of GRAP on Inventories the legislature is not required to measure inventories for reporting periods beginning on or after a date within three years following the date of initial adoption of the standard. Inventories has accordingly been recognised at provisional amounts, as disclosed in note 4. The transitional provisions expires on 31 March 2018.

Until such time as the measurement period expires and inventories is recognised and measured in accordance with the requirements of the Standard of GRAP on Intangible assets, the Legislature need not comply with the Standards of GRAP on:  Presentation of Financial Statements (GRAP 1);  The Effects of Changes in Foreign Exchange Transactions (GRAP 4);  Leases (GRAP 13);  Segment Reporting (GRAP 18);  Discontinued Operations (GRAP 100).

The exemption from applying the measurement requirements of the Standard of GRAP on Inventories implies that any associated presentation and disclosure requirements need not be complied with for inventories not measured in accordance with the requirements of the Standard of GRAP on Inventories.

1.9 Statutory receivables

Statutory receivables are receivables that:  arise from legislation, supporting regulations, or similar means; and

86 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

 require settlement by another entity in cash or another financial asset.

Statutory receivables constitute revenue receivable from property rates, fines, penalties, grants and fees charged in terms of legislation.

The Legislature recognises statutory receivables as follows:  if the transaction is an exchange transaction, using GRAP 9;  if the transaction is a non-exchange transaction, using GRAP 23;  if the transaction is not within the scope of either GRAP 9 or GRAP 23, the receivable is recognised when: - the definition of an asset is met; and - it its probable that future economic benefits or service potential associated with the asset will flow to the Legislature and the transaction amount can be measured reliably.

The Legislature measures a statutory receivable initially at its transaction amount. The Legislature measures all statutory receivables after initial recognition using the cost method.

Under the cost method the amount recognised initially is only changed subsequently to reflect any:  interest or other charges that may have accrued on the receivable;  impairment loss; and  amounts derecognised.

The Legislature assesses at the end of each reporting period whether there is objective evidence that a statutory receivable or group of statutory receivables is impaired. For amounts due the Legislature, significant financial difficulties of the receivable, probability that the receivable will enter bankruptcy and default payments are all considered indicators of impairment.

If there is objective evidence that an credit loss on statutory receivables has been incurred, the amount of the loss is measured as the difference between the asset's carrying amount and the estimated future cash flows - discounted if the effect of discounting is material - using a rate that reflects the current risk free rate and, if applicable, any risks specific to the statutory receivable, or group of statutory receivables, for which the future cash flow estimates have not been adjusted.

The carrying amount of the asset is reduced 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 credit loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised credit loss is reversed by adjusting the allowance account. The reversal does not result in a carrying amount of the statutory receivable 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.

Where statutory receivables are impaired through the use of an allowance account, the amount of the loss is recognised in surplus or deficit within operating expenses. When such receivables are written off, the write off is made against the relevant allowance account. Subsequent recoveries of amounts previously written off are credited against operating expenses.

The Legislature derecognises a statutory receivable when:  the rights to the cash flows from the statutory receivable are settled, expire or are waived;  the Legislature transfers to another party substantially all of the risks and rewards of ownership of the receivable;  the Legislature, despite having retained some significant risks and rewards of ownership of the receivable,

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 has transferred control of the receivable 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 Legislature: - derecognises the receivable; - recognises separately any rights and obligations created or retained in the transfer.

The carrying amount of the transferred asset is allocated between the rights or obligations retained and those transferred on the basis of their relative fair values at the transfer date. Newly created rights and obligations are considered for inclusion within the scope of GRAP 104 or another standard of GRAP. Any difference between the consideration received and amounts recognised and derecognised is recognised in surplus or deficit in the period of the transfer.

1.10 Employee benefits

Short-term employee benefits

Short-term employee benefits are employee benefits (other than termination benefits) that are due to be settled within 12 months after the end of the period in which the employees render the related service.

Short-term employee benefits include items such as:  wages, salaries and social security contributions;  short-term compensated absences (such as paid annual leave and paid sick leave) where the compensation for the absences is due to be settled within 12 months after the end of the reporting period in which the employees render the related employee service;  bonus, incentive and performance related payments payable within 12 months after the end of the reporting period in which the employees render the related service; and  non-monetary benefits (for example, medical care, and free or subsidised goods or services such as housing, cars and cell phones) for current employees.

When an employee has rendered service to the Legislature during a reporting period, the Legislature recognises the undiscounted amount of short-term employee benefits expected to be paid in exchange for that service:  as a liability (accrued expense), after deducting any amount already paid. If the amount already paid exceeds the undiscounted amount of the benefits, the Legislature recognises that excess as an asset (prepaid expense) to the extent that the prepayment will lead to, for example, a reduction in future payments or a cash refund; and  as an expense, unless another Standard requires or permits the inclusion of the benefits in the cost of an asset.

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. The Legislature measures the expected cost of accumulating compensated absences as the additional amount that the Legislature expects to pay as a result of the unused entitlement that has accumulated at the reporting date.

The Legislature recognises the expected cost of bonus; incentive and performance related payments when the Legislature has a present legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the obligation can be made. A present obligation exists when the Legislature has no realistic alternative but to make the payments.

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Other long-term employee benefits

The Legislature has an obligation to provide long-term service allowance benefits to all of its employees.

The Legislature’s liability is based on an actuarial valuation. The Projected Unit Credit Method is used to value the liabilities. Actuarial gains and losses on the long-term service awards are recognised in the statement of financial performance.

The amount recognised as a liability for long-term service awards is the net total of the following amounts:  the present value of the defined benefit obligation at the reporting date;  minus the fair value at the reporting date of plan assets (if any) out of which the obligations are to be settled directly.

The Legislature recognises the net total of the following amounts as expense or revenue, except to the extent that another Standard requires or permits their inclusion in the cost of an asset:  current service cost;  interest cost;  the expected return on any plan assets and on any reimbursement right recognised as an asset; actuarial gains  and losses, which is recognised immediately;  past service cost, which is recognised immediately; and  the effect of any curtailments or settlements.

1.11 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 obligation; 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.

Where the effect of time value of money is material, the amount of a provision is the present value of the expenditures expected to be required to settle the obligation.

The discount rate is a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement is recognised when, and only when, it is virtually certain that reimbursement will be received if the Legislature settles the obligation. The reimbursement is treated as a separate asset. The amount recognised for the reimbursement does not exceed the amount of the provision.

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 obligation.

Where discounting is used, the carrying amount of a provision increases in each period to reflect the passage of time. This increase is recognised as an interest expense.

A provision is used only for expenditures for which the provision was originally recognised. Provisions are not recognised for future operating expenditure.

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If the Legislature has a contract that is onerous, the present obligation (net of recoveries) under the contract is recognised and measured as a provision. A constructive obligation to restructure arises only when the Legislature:  has a detailed formal plan for the restructuring, identifying at least: - the activity/operating unit or part of a activity/operating unit concerned; - the principal locations affected; - the location, function, and approximate number of employees who will be compensated for services being terminated; - the expenditures that will be undertaken; and - when the plan will be implemented; and  has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those affected by it.

A restructuring provision includes only the direct expenditures arising from the restructuring, which are those that are both:  necessarily entailed by the restructuring; and  not associated with the ongoing activities of the Legislature

Contingent assets are recorded in the notes to the financial statements when a possible asset arises from past events, and whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events not within the control of the legislature.

A contingent liability:  a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Legislature; or  a present obligation that arises from past events but is not recognised because: - it is not probable than an outflow of resources embodying economic benefits or service potential will be required to settle the obligation; - the amount of the obligation cannot be measured with sufficient reliability. Contingent assets and contingent liabilities are not recognised but disclosed in note 33.

The municipality recognises a provision for financial guarantees and loan commitments when it is probable that an outflow of resources embodying economic benefits and service potential will be required to settle the obligation and a reliable estimate of the obligation can be made.

1.12 Commitments

Commitments are recorded at cost in the notes to the financial statements when there is a contractual arrangement or an approval by management in a manner that raises a valid expectation that the legislature will discharge its responsibilities thereby incurring future expenditure that will result in the outflow of cash.

Approved and contracted commitments This is where the expenditure has been approved and the contract has been awarded at the reporting date

Approved but not yet contracted commitment This is where the expenditure has been approved and the contract is yet to be awarded or is awaiting finalisation at the reporting date.

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1.13 Revenue from exchange transactions

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.

Measurement

Revenue is measured at the fair value of the consideration received or receivable, net of trade discounts and volume rebates.

Interest

Revenue arising from the use by others of legislature assets yielding interest 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.

1.14 Revenue from non-exchange transactions

Revenue comprises gross inflows of economic benefits or service potential received and receivable by an Legislature, which represents an increase in net assets, other than increases relating to contributions from owners.

Conditions on transferred assets are stipulations that specify that the future economic benefits or service potential embodied in the asset is required to be consumed by the recipient as specified or future economic benefits or service potential must be returned to the transferor.

Control of an asset arise when the Legislature can use or otherwise benefit from the asset in pursuit of its objectives and can exclude or otherwise regulate the access of others to that benefit.

Exchange transactions are transactions in which one entity 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 entity in exchange.

Non-exchange transactions are transactions that are not exchange transactions. In a non-exchange transaction, an Legislature either 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.

Restrictions on transferred assets are stipulations that limit or direct the purposes for which a transferred asset may be used, but do not specify that future economic benefits or service potential is required to be returned to the transferor if not deployed as specified.

Stipulations on transferred assets are terms in laws or regulation, or a binding arrangement, imposed upon the use of a transferred asset by entities external to the reporting Legislature.

Transfers are inflows of future economic benefits or service potential from non-exchange transactions.

Recognition An inflow of resources from a non-exchange transaction recognised as an asset is recognised as revenue, except to

91 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS the extent that a liability is also recognised in respect of the same inflow.

As the Legislature satisfies a present obligation recognised as a liability in respect of an inflow of resources from a non- exchange transaction recognised as an asset, it reduces the carrying amount of the liability recognised and recognises an amount of revenue equal to that reduction.

Measurement

Revenue from a non-exchange transaction is measured at the amount of the increase in net assets recognised by the Legislature.

When, as a result of a non-exchange transaction, the Legislature recognises an asset, it also recognises revenue equivalent to the amount of the asset measured at its fair value as at the date of acquisition, unless it is also required to recognise a liability. Where a liability is required to be recognised it will be measured as the best estimate of the amount required to settle the obligation at the reporting date, and the amount of the increase in net assets, if any, recognised as revenue. When a liability is subsequently reduced, because the taxable event occurs or a condition is satisfied, the amount of the reduction in the liability is recognised as revenue.

Appropriated funds

Appropriated funds comprises of Legislature's allocations as well as direct charges against the revenue fund (i.e. “member’s salaries).

Appropriated funds are recognised in the statement of financial performance on the date the appropriation becomes effective. Adjustments made in terms of the adjustments budget process are recognised in the statement of financial performance on the date the adjustments become effective.

Public contributions and donations, including goods in-kind

Public contributions and donations, including goods in kind, are recognised as assets and revenue when it is probable that the future economic benefits or service potential will flow to the Legislature and the fair value of the assets can be measured reliably.

Services in-kind

Services in-kind are recognised.

The Legislature recognises services in-kind that are significant to its operations and/or service delivery objectives as assets and recognise the related revenue when it is probable that the future economic benefits or service potential will flow to the Legislature and the fair value of the assets can be measured reliably.

Where services in-kind are not significant to the Legislature’s operations and/or service delivery objectives and/or do not satisfy the criteria for recognition, the Legislature disclose the nature and type of services in-kind received during the reporting period.

1.15 Transfers and subsidies

Transfers payments include all “non-exchange” payments made by the Legislature. A payment is “non-exchange” if the Legislature does not receive anything directly in return for the transfer to the other party. Transfer payments are expensed.

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1.16 Comparative figures Where necessary, comparative figures have been reclassified to conform to changes in presentation in the current year. Refer to note 28 - Changes in accounting policies for detail.

1.17 Unauthorised expenditure

Unauthorised expenditure defined in section 1 of the FMPPLA means:  overspending of Parliament’s approved budget or a main division within that budget;

 any expenditure from Parliament’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;

 any expenditure of donor funds for a purpose not specified in the agreement with the donor.

Unauthorised expenditure is measured at the amount of the confirmed unauthorised expenditure.

1.18 Fruitless and wasteful expenditure Fruitless expenditure means expenditure which was made in vain and would have been avoided had reasonable care been exercised.

Fruitless and wasteful expenditure is recorded in the notes to the financial statements when confirmed. The amount recorded is equal to the total value of the fruitless and or wasteful expenditure incurred.

Fruitless and wasteful expenditure is removed from the notes to the financial statements when it is resolved or transferred to receivables for recovery.

Fruitless and wasteful expenditure receivables are measured at the amount that is expected to be recoverable and are derecognised when settled or subsequently written-off as irrecoverable.

1.19 Irregular expenditure

Irregular expenditure as defined in section 1 of the FMPPLA expenditure other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of this Act or any applicable legislation.

Irregular expenditure is recorded in the notes to the financial statements when confirmed. The amount recorded is equal to the value of the irregular expenditure incurred unless it is impracticable to determine, in which case reasons therefor are provided in the note.

Irregular expenditure is removed from the note when it is either condoned by the relevant authority, transferred to receivables for recovery or not condoned and is not recoverable.

Irregular expenditure receivables are measured at the amount that is expected to be recoverable and are de-recognised when settled or subsequently written-off as irrecoverable.

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1.20 Accumulated surplus/deficit

The accumulated surplus represents the net difference between the total assets and the total liabilities of the Legislature. Any surpluses and deficits realised during a specific financial year are credited/debited against accumulated surplus/deficit. Prior year adjustments, relating to income and expenditure, are debited/credit against accumulated surplus when retrospective adjustments are made.

1.21 Change in accounting policies, estimates and errors

The Legislature accounts for change in accounting policies, estimates and errors in accordance with the Standard of GRAP on Accounting Policies, Changes in Accounting Estimates and Errors. The default is that changes in accounting policies and errors be adjusted retrospectively and changes in accounting estimates be adjusted prospectively. Refer to note 28 -Changes in accounting policies and 27 - Prior period errors.

1.22 Compensation of employees

Salaries and Wages

Salaries and wages are recognised in the statement of financial performance on the date of payment. Social contributions Social contributions made by the Eastern Cape Provincial Legislature in respect of current employees are recognised in the statement of financial performance on the date of payment.

Social contributions made by the Eastern Cape Provincial Legislature in respect of ex-employees are classified as transfers to households in the statement of financial performance on the date of payment.

Key management personnel

Compensation paid to key management personnel and the presiding officers, including their family members where applicable, is included in the disclosure notes. Refer to note 19 - Employee related costs.

1.23 Offsetting

Assets, liabilities, revenue and expenses have not been offset except when offsetting is required or permitted by a Standard of GRAP.

1.24 Prepayments

Prepayments and advances are recognised in the statement of financial position when the Legislature receives or disburses the cash. Prepayments and advances are initially and subsequently measured at cost.

1.25 Budget information The approved budget is prepared on the cash basis and presented by economic classification linked to performance outcome objectives.

The approved budget covers the fiscal period from 2015/04/01 to 2016/03/31.

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The annual financial statements and the budget are not on the same basis of accounting therefore a comparison with the budgeted amounts for the reporting period has been done using the actual figures on cash basis.

1.26 Related parties

A related party is a person or an entity with the ability to control or jointly control the other party or exercise significant influence over the other party, or vice versa, or an entity that is subject to common control, or joint control.

Management including presiding officers 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.

Close members of the family of a person are considered to be those family members who may be expected to influence, or be influenced 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.

1.27 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 effective and adopted in the current year

In the current year, the Legislature has adopted the following standards and interpretations that are effective for the current financial year and that are relevant to its operations:

GRAP 21 (as amended 2015): Impairment of Non-cash-generating Assets

The following amendments were made to the standard:  general definitions have been deleted as these definitions are not essential to the understanding of the Standard. A paragraph has been included to explain that terms defined in other Standards of GRAP are used with the same meaning as in those other Standards of GRAP;  additional commentary has been added to clarify the objective of cash-generating assets and non-cash- generating assets, and consequential amendments made to the definition of cash-generating assets;  the indicators of internal sources of information were amended to include obsolescence as an indication that an asset may be impaired. In line with the amendments made to IPSAS 21 on Impairment of Non-cash-generating Assets (IPSAS 21) in 2011, an amendment has been made to include another indicator of impairment i.e., where an asset’s useful life has been reassessed as finite rather than indefinite;  where the recoverable service amount is value in use, disclosure requirements have been added about whether an independent valuer is used to determine value in use together with the methods and significant assumptions applied in determining the value in use have been added to the disclosure requirements; and  appendices with illustrative examples of indications of impairment and measurement of impairment losses have been deleted from the Standard as the National Treasury has issued complete examples as part of its implementation guidance.

The effective date of the amendment is for years beginning on or after 01 April 2015.

The Legislature has adopted the amendment for the first time in the 2016 annual financial statements. The impact of the amendment is not material.

GRAP 26 (as amended 2015): Impairment of Cash-generating Assets

The following amendments were made to the standard:  editorial and other changes to the original text have been made to ensure consistency with other Standards of GRAP;  general definitions have been deleted as these definitions are not essential to the understanding of the Standard. A paragraph has been included to explain that terms defined in other Standards of GRAP are used with the same meaning as in those other Standards of GRAP;  additional commentary has been added to clarify the objective of cash-generating assets and non-cash- generating assets, and consequential amendments made to the definition of cash-generating assets and cash- generating unit; in line with the amendments made to IPSAS 26 on Impairment of Cash-generating Assets (IPSAS 26) in 2010, an amendment has been made to include another indicator of impairment in relation to the internal sources of information;  where the recoverable amount is value in use, disclosure requirements have been added about whether an independent valuer is used to determine value in use together with the methods and significant assumptions applied in determining the value in use have been added to the disclosure requirements; and  appendices with illustrative examples on using present value techniques to measure value in use and illustrative

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guidance have been deleted from the Standard as the National Treasury has issued complete examples as part of its implementation guidance.

The effective date of the amendment is for years beginning on or after 01 April 2015.

The Legislature has adopted the amendment for the first time in the 2016 annual financial statements. The impact of the amendment is not material. GRAP standards, directives and interpretations adopted

The following GRAP standards have been adopted in the current financial year:  GRAP 1 - Presentation of Financial Statements  GRAP 2 - Cash Flow Statements  GRAP 3 - Accounting Policies, Changes in Accounting Estimates and Errors  GRAP 4 - The Effects of Changes in Foreign Exchange Rates  GRAP 5 - Borrowing Costs  GRAP 6 - Consolidated and Separate Financial Statements  GRAP 7 - Investments in Associates  GRAP 8 - Interests in Joint Ventures  GRAP 9 - Revenue from Exchange Transactions  GRAP 10 - Financial Reporting in Hyperinflationary Economies  GRAP 11 - Construction Contracts  GRAP 12 - Inventories  GRAP 13 - Leases  GRAP 14 - Events After the Reporting Date  GRAP 16 - Investment Property  GRAP 17 - Property, Plant and Equipment  GRAP 19 - Provisions, Contingent Liabilities and Contingent Assets  GRAP 21 - Impairment of Non-cash-generating Assets  GRAP 23 - Revenue from Non-exchange Transactions (Taxes and Transfers)  GRAP 24 - Presentation of Budget Information in Financial Statements  GRAP 25 - Employee Benefits  GRAP 26 - Impairment of Cash-generating Assets  GRAP 27 - Agriculture  GRAP 31 - Intangible Assets  GRAP 100 - Discontinued Operations  GRAP 103 - Heritage Assets  GRAP 104 - Financial Instruments The following GRAP directives have been adopted in the current financial year:  Directive 1 - Repeal of Existing Transitional Provisions in, and Consequential Amendments to, Standards of GRAP  Directive 5 - Determining the GRAP Reporting Framework  Directive 7 - The Application of Deemed Cost  Directive 8 - Transitional Provisions for Parliament and the Provincial Legislatures  Directive 11 - Changes in the Measurement Bases Following the Initial Adoption of the Standards of GRAP The following GRAP interpretations have been adopted in the current financial year:  IGRAP 1 - Applying the Probability Test on Initial Recognition of Revenue  IGRAP 2 - Changes in Existing Decommissioning, Restoration and Similar Liabilities  IGRAP 3 - Determining whether an Arrangement Contains a Lease  IGRAP 4 - Rights to Interests Arising from Decommissioning, Restoration and Environmental Rehabilitation Funds  IGRAP 5 - Applying the Restatement Approach under the Standard of GRAP on Financial Reporting in Hyperinflationary Economies  IGRAP 6 - Loyalty Programmes  IGRAP 7 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction  IGRAP 8 - Agreements for the Construction of Assets from Exchange Transactions

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 IGRAP 9 - Distributions of Non-cash Assets to Owners  IGRAP 10 - Assets Received from Customers  IGRAP 11 - Consolidations – Special Purpose Entities  IGRAP 12 - Jointly Controlled Entities – Non-monetary Contributions by Venturers  IGRAP 13 - Operating Leases – Incentives  IGRAP 14 - Evaluating the Substance of Transactions Involving the Legal Form of a Lease  IGRAP 15 - Revenue – Barter Transactions Involving Advertising Services  IGRAP 16 - Intangible Assets – Website Costs

The effective date of the amendment is for years beginning on or after 01 April 2015.

The Legislature has adopted the amendment for the first time in the 2016 annual financial statements. The impact of the adoption is set out in note 25 First-time adoption of GRAP.

Improvements to the standards of GRAP (2013)

Amendments were made to the following standards of GRAP:  GRAP 1 - Presentation of Financial Statements  GRAP 2 - Cash Flow Statements  GRAP 3 - Accounting Policies, Changes in Accounting Estimates and Errors  GRAP 7 - Investments in Associates  GRAP 10 - Financial Reporting in Hyperinflationary Economies  GRAP 11 - Construction Contracts  GRAP 13 - Leases  GRAP 17 - Property, Plant and Equipment  GRAP 19 - Provisions, Contingent Liabilities and Contingent Assets  GRAP 21 - Impairment of Non-cash-generating Assets (refer to separate note)  GRAP 24 - Presentation of Budget Information in Financial Statements  GRAP 25 - Employee Benefits  GRAP 26 - Impairment of Cash-generating Assets (refer to separate note)  GRAP 31 - Intangible Assets  GRAP 103 - Heritage Assets  GRAP 104 - Financial Instruments

The amendments relate mainly due to editorial and other changes to the original text to ensure consistency with other Standards of GRAP and deletion of the appendices with illustrative guidance and examples from the standards, as the National Treasury has issued complete examples as part of its implementation guidance. The effective date of the amendment is for years beginning on or after 01 April 2015.

The Legislature has adopted the amendment for the first time in the 2016 annual financial statements. The impact of the amendment is not material.

GRAP 23 (as amended 2015): Revenue from Non-exchange Transactions

The following amendments were made to the standard:  editorial and other changes to the original text have been made to ensure consistency with other Standards of GRAP;  the scope paragraph has been amended to exclude non-exchange revenue from construction contracts from this Standard;  commentary has been added to clarify that discounts, volume rebates or other reductions in the quoted price of assets are exchange transactions that should be treated in accordance with the Standard of GRAP on Revenue from Exchange Transactions;  the Standard was amended to make it mandatory for entities to recognise services in-kind to the extent that the

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services in-kind are significant to an entity’s operations and/or service delivery objectives and to the extent that the recognition criteria have been met;  commentary has been added to clarify that services in-kind are not limited to the provision of services by individuals but also include the right to use assets. Examples have been added to illustrate this amendment; and  the appendix with illustrative examples has been deleted from the Standard as the National Treasury has issued complete examples as part of its implementation guidance.

The amendment was applied prospectively from 01 April 2015. The impact the amendment is set out in note 14 - Revenue.

2.2 Standards and interpretations issued, but not yet effective

The Legislature has not applied the following standards and interpretations, which have been published and are mandatory for the Legislature’s accounting periods beginning on or after 01 April 2016 or later periods:

GRAP 18: Segment Reporting

Segments are identified by the way in which information is reported to management, both for purposes of assessing performance and making decisions about how future resources will be allocated to the various activities undertaken by the Legislature. The major classifications of activities identified in budget documentation will usually reflect the segments for which an entity reports information to management.

Segment information is either presented based on service or geographical segments. Service segments relate to a distinguishable component of an entity that provides specific outputs or achieves particular operating objectives that are in line with the Legislature’s overall mission. Geographical segments relate to specific outputs generated, or particular objectives achieved, by an entity within a particular region.

The effective date of the standard is not yet set by the Minister of Finance The standard is not applicable to the Legislature.

GRAP 20: Related parties

The objective of this standard is to ensure that a reporting entity’s annual financial statements contain the disclosures necessary to draw attention to the possibility that its financial position and surplus or deficit may have been affected by the existence of related parties and by transactions and outstanding balances with such parties.

The Legislature (in this standard referred to as the reporting entity) applies this standard in:

 identifying related party relationships and transactions;  identifying outstanding balances, including commitments, between an entity and its related parties;  identifying the circumstances in which disclosure of the items in (a) and (b) is required; and  determining the disclosures to be made about those items.

This standard requires disclosure of related party relationships, transactions and outstanding balances, including commitments, in the consolidated and separate financial statements of the reporting entity in accordance with the Standard of GRAP on Consolidated and Separate Financial Statements. This standard also applies to individual annual financial statements. Disclosure of related party transactions, outstanding balances, including commitments, and relationships with related parties may affect users’ assessments of the financial position and performance of the reporting entity and its ability to deliver agreed services, including assessments of the risks and opportunities facing the entity. This disclosure also ensures that the reporting entity is transparent about its dealings with related parties. The standard states that a related party is a person or an entity with the ability to control or jointly control the other party,

99 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS or exercise significant influence over the other party, or vice versa, or an entity that is subject to common control, or joint control. As a minimum, the following are regarded as related parties of the reporting entity:

 A person or a close member of that person’s family is related to the reporting entity if that person: - has control or joint control over the reporting entity; - has significant influence over the reporting entity; - is a member of the management of the entity or its controlling entity.

 An entity is related to the reporting entity if any of the following conditions apply: - the entity is a member of the same economic entity (which means that each controlling entity, controlled entity and fellow controlled entity is related to the others); - one entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of an economic entity of which the other entity is a member); - both entities are joint ventures of the same third party; - one entity is a joint venture of a third entity and the other entity is an associate of the third entity; - the entity is a post-employment benefit plan for the benefit of employees of either the entity or an entity related to the entity. If the reporting entity is itself such a plan, the sponsoring employers are related to the entity; - the entity is controlled or jointly controlled by a person identified in (a); and - a person identified in (a)(i) has significant influence over that entity or is a member of the management of that entity (or its controlling entity).

The standard furthermore states that related party transaction is a transfer of resources, services or obligations between the reporting entity and a related party, regardless of whether a price is charged.

The standard elaborates on the definitions and identification of:  close member of the family of a person;  management;  related parties;  remuneration; and  significant influence.

The standard sets out the requirements, inter alia, for the disclosure of:  control;  related party transactions; and  remuneration of management.

Only transactions with related parties where the transactions are not concluded within normal operating procedures or on terms that are not no more or no less favourable than the terms it would use to conclude transactions with another entity or person are disclosed.

The standard requires that remuneration of management must be disclosed per person and in aggregate. The effective date of the standard is not yet set by the Minister of Finance. The Legislature expects to adopt the standard for the first time once it becomes effective, but has already formulated an accounting policy for this reporting period based on the standard.

It is unlikely that the standard will have a material impact on the Legislature’s annual financial statements.

GRAP 32: Service Concession Arrangements: Grantor

The standard applies to a contractual arrangement between a grantor and an operator in which the operator uses the service concession asset to provide a mandated function on behalf of the grantor for a specified period of time. The operator providing the mandated function on behalf of the grantor can either be a private party or another public sector entity. The

100 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS standard applies to the grantor only. PPP agreements that are governed and regulated in terms of the PFMA and MFMA, are some of the arrangements that fall within the scope of GRAP 32.

For any other arrangements that meet the control criteria as set out in paragraph .07 of GRAP 32 the principles in the standard on accounting for such arrangements will apply.

An asset provided by the operator, or an upgrade to an existing asset, is recognised as a service concession asset with a corresponding liability, being the performance obligation, if certain criteria and conditions are met.

The effective date of the standard is not yet set by the Minister of Finance.

The Legislature expects to adopt the standard for the first time once it becomes effective.

It is unlikely that the standard will have a material impact on the Legislature's annual financial statements.

GRAP 108: Statutory Receivables

GRAP 108 only deals with those receivables that arise from legislation or an equivalent means, such as regulations, bylaws or other documents issued in terms of legislation, such as ministerial orders and cabinet or municipal council decisions.

Therefore in order to be statutory in nature specific legislation should require the entity to undertake the transactions, such as outlining who should be taxed and at what rates and amounts.

Statutory receivables are not contractual receivables, the latter of which would normally meet the definition of a financial asset and will be within the scope of the Standard of GRAP on Financial Instruments. Statutory receivables are not voluntarily entered into as with contractual receivables because they arise as a result of specific legislative requirements.

Statutory receivables are initially measured at their transaction amount and subsequently using the cost method.

Under the cost method, the initial measurement of the receivable is changed subsequent to initial recognition to reflect any:

 interest or other charges that may have accrued on the receivable (where applicable);  impairment losses; and  amounts derecognised.

The effective date of the standard is not yet set by the Minister of Finance.

The Legislature expects to adopt the standard for the first time once it becomes effective, but has already formulated an accounting policy for this reporting period based on the standard.

The impact of this standard is currently being assessed.

GRAP 17: Service Concession Arrangements where a Grantor Controls a Significant Residual Interest in an Asset

This interpretation provides guidance to the grantor where it has entered into a service concession arrangement, but only controls, through ownership, beneficial entitlement or otherwise, a significant residual interest in a service concession asset at the end of the arrangement, where the arrangement does not constitute a lease.

A service concession arrangement is a contractual arrangement between a grantor and an operator in which the operator uses the service concession asset to provide a mandated function on behalf of the grantor for a specified period of time.

101 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

The operator is compensated for its services over the period of the service concession arrangement, either through payments, or through receiving a right to earn revenue from third party users of the service concession asset, or the operator is given access to another revenue-generating asset of the grantor for its use.

Before the grantor can recognise a service concession asset in accordance with the Standard of GRAP on Service Concession Arrangements: Grantor, both the criteria as noted in paragraph .01 of this Interpretation of the Standards of GRAP need to be met. In some service concession arrangements, the grantor only controls the residual interest in the service concession asset at the end of the arrangement, and can therefore not recognise the service concession asset in terms of the Standard of GRAP on Service Concession Arrangements: Grantor.

This interpretation concludes on the recognition of the performance obligation and the right to receive a significant interest in a service concession asset.

The effective date of the interpretation is not yet set by the Minister of Finance.

The Legislature expects to adopt the interpretation for the first time once it becomes effective.

It is unlikely that the interpretation will have a material impact on the Legislature's annual financial statements.

GRAP 16 (as amended 2015):

Investment Property

Amendments made to the standard are:  the principles and explanations related to the distinction between investment property and property, plant and equipment were reviewed;  an indicator-based assessment of useful lives of assets was introduced;  the wording related to the use of external valuers was clarified;  more specific presentation and disclosure requirements were introduced for capital work-in-progress;  the encouraged disclosures were deleted;  separate presentation of expenditure incurred on repairs and maintenance in the financial statements are now required.

The effective date of the amendment is for years beginning on or after 01 April 2016.

The Legislature expects to adopt the amendment for the first time in the 2017 annual financial statements.

It is unlikely that the amendment will have a material impact on the Legislature's annual financial statements.

GRAP 17 (as amended 2015): Property, Plant and Equipment

Amendments made to the standard are:  the principles and explanations related to the distinction between investment property and property, plant and equipment were reviewed;  an indicator-based assessment of useful lives of assets was introduced;  the wording related to the use of external valuers was clarified;  more specific presentation and disclosure requirements were introduced for capital work-in-progress;.  the encouraged disclosures were deleted;  separate presentation of expenditure incurred on repairs and maintenance in the financial statements are now required.

102 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

Amendments identified as part of the post-implementation review, affected the following areas:  Indicator-based assessment of the useful lives of assets  Use of external valuers  Encouraged disclosures  Capital work-in-progress  Expenditure incurred on repairs and maintenance

The effective date of the amendment is for years beginning on or after 01 April 2016.

The Legislature expects to adopt the amendment for the first time in the 2017 annual financial statements.

It is unlikely that the amendment will have a material impact on the Legislature’s annual financial statements.

GRAP 109: Accounting by Principals and Agents

The objective of this Standard is to outline principles to be used by an entity to assess whether it is party to a principal- agent arrangement, and whether it is a principal or an agent in undertaking transactions in terms of such an arrangement.

The Standard does not introduce new recognition or measurement requirements for revenue, expenses, assets and/or liabilities that result from principal-agent arrangements. The Standard does however provide guidance on whether revenue, expenses, assets and/or liabilities should be recognised by an agent or a principal, as well as prescribe what information should be disclosed when an entity is a principal or an agent.

The effective date of the standard is not yet set by the Minister of Finance.

The Legislature expects to adopt the standard for the first time once it becomes effective. The impact of this standard is currently being assessed.

Directive 12: The Selection of an Appropriate Reporting Framework by Public Entities

Historically, public entities have prepared financial statements in accordance with generally recognised accounting practice, unless the Accounting Standards Board (the Board) approved the application of generally accepted accounting practice for that entity. “Generally accepted accounting practice” has been taken to mean Statements of Generally Accepted Accounting Practice (Statements of GAAP), or for certain entities, International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board. Since Statements of GAAP have been withdrawn from 1 December 2012, public entities will be required to apply another reporting framework in the future.

The purpose of this Directive is to prescribe the criteria to be applied by public entities in selecting and applying an appropriate reporting framework. The effective date of the directive is for years beginning on or after 01 April 2018.

The Legislature expects to adopt the standard for the first time in the 2019 annual financial statements. The directive will not have any impact on the Legislature's annual financial statements.

GRAP 105: Transfer of Functions between Entities Under Common Control

The objective of this standard is to establish accounting principles for the acquirer and transferor in a transfer of functions between entities under common control.

A transfer of functions between entities under common control is a reorganisation and / or reallocation of functions between entities that are ultimately controlled by the same entity before and after a transfer of functions.

103 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS

In the event of a transfer of functions between entities under common control, the assets and liabilities should be recognised (by the acquirer) at their carrying amounts and should be derecognised (by the transferor) at their carrying amounts.

The difference between the amount of consideration paid or received, if any, and the carrying amounts of assets and liabilities should be recognised in accumulated surplus / (deficit).

The effective date of the standard is not yet set by the Minister of Finance. This standard is not applicable to the Legislature.

GRAP 106: Transfer of Functions Between Entities Not Under Common Control

The objective of this standard is to establish accounting principles for the acquirer and transferor in a transfer of functions between entities not under common control.

A transfer of functions between entities not under common control is a reorganisation and / or reallocation of functions between entities that are not ultimately controlled by the same entity before and after a transfer of functions. In the event of a transfer of functions between entities not under common control, the assets and liabilities should be recognised (by the acquirer) at their acquisition date fair values.

The difference between the amount of consideration paid, if any, and the carrying amounts of assets acquired and liabilities assumed should be recognised in accumulated surplus / (deficit).

For a transfer of functions between entities not under common control there are some specific recognition and measurement principles and exceptions to the recognition and measurement principles.

The effective date of the standard is not yet set by the Minister of Finance. This standard is not applicable to the Legislature.

GRAP 107: Mergers

The objective of this standard is to establish accounting principles for the combined entity and combining entities in a merger.

A merger is where a new combined entity is started, acquirer can be identified and the combining entities do not have any control over the combined entity.

In the event of a merger, the assets and liabilities should be recognised (by the combined entity) at their carrying amounts and should be derecognised (by the combining entities) at their carrying amounts.

The difference between the carrying amounts of assets and liabilities should be recognised in accumulated surplus /(deficit). The effective date of the standard is not yet set by the Minister of Finance. The Legislature expects to adopt the standard for the first time once it becomes effective.

It is unlikely that the standard will have a material impact on the Legislature's annual financial statements.

104 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2016 2015 R '000 R '000

2. Cash and cash equivalents

Cash and cash equivalents consist of:

Bank balances 10 465 24 775

There are no amounts of significant cash and cash equivalent balances held by the Eastern Cape Provincial Legislature that are not available for use.

The legislature had the following bank account

` Description Bank statement balances - R'000 Cash book balances - R'000

31 March 2016 31 March 2015 31 March 2014 31 March 2016 31 March 2015 31 March 2014 First National Bank- 10 465 24 775 10 598 5 463 24 775 10 598 Current Account Outstanding payment not - - - 5 002 - - cleared through the bank

Total 10 465 24 775 10 598 10 465 24 775 10 598

4. Receivables from exchange transactions 2016 2015 R '000 R '000

Gross balances Interest from bank receivable 23 5 Staff receivables 654 1 329 677 1 334

Less: Allowance for credit losses Interest receivable - - Staff receivables (71) (487) (71) (487)

Net balance Interest receivable 23 5 Staff receivables 583 842 606 847

Staff receivables 1 - 3 months 201 725 3- 6 months - - 6 - 12 months 15 8 12+ months 427 519 Other adjustments 11 77 654 1 329

105 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2016 2015 R '000 R '000

3. Receivables from exchange transactions (continued)

Reconciliation of allowance for credit losses Balance at beginning of the year 487 432 Increase/(decrease) of the provision of allowance for credit losses (416) 55 71 487

The decrease of the provision for credit losses is as a result of a debtor who was written off during the year. This debtor was assessed for impairment as at 31 March 2015.

Credit quality of receivables from exchange transactions

The credit quality of receivables from exchange transactions that are neither past due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates.

Receivables from exchange transactions past due but not impaired

Receivables from exchange transactions which are less than 3 months past due are also considered for impairment, however, as at 31 March 2016, R79 (2015: R30) were past due but not impaired. (All figures have been rounded to the nearest thousand Rand).

The ageing of amounts past due but not impaired is as follows:

3 months past due 18 30 Over 6 months past due 61 -

Receivables from exchange transactions impaired

(All figures have been rounded to the nearest thousand Rand).

As of 31 March 2016, receivables from exchange transactions of R564 (2015: R542) were impaired and provided for.

The amount of the allowance was R71 as of 31 March 2016 (2015: R487).

The ageing of these receivables is as follows:

3 months past due 182 26 Over 6 months past due 382 516

106 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2016 2015 R '000 R '000

5. Inventories

Inventory 199 - 5.1 Inventory items on hand at year end (in quantities) Items Inventory quantities Inventory as at quantities as at 31 March 31 March 2016 2015 (quantities) (quantities)

Cleaning materials 18 098 - Clothing items 52 - Gardening tools 16 - Stationery 2 907 - Toiletry 7 301 - 28 374 -

It was impracticable to determine the prior year (2015) inventory balance as the stock count was not done then. The stock count was not a requirement under the Modified Cash Standards.

Transitional provisions (All figures have been rounded to the nearest thousand Rand).

In accordance with the transitional provisions as per Directive 8 of the GRAP Reporting Framework, certain inventory with a carrying value of R199 (2015: R0) was recognised at provisional amounts. The Legislature is currently busy with a measurement project.

Inventory pledged as security

None of the inventory have been pledged as security.

6. Property, plant and equipment

2016 2015 Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation depreciation Valuation depreciation and and accumulated accumulated impairment impairment R'000 R'000 R'000 R'000 R'000 R'000 Buildings 3 528 - 3 528 3 207 - 3 207 Computer equipment 20 296 - 20 296 18 216 - 18 216 Furniture and office equipment 14 642 - 14 642 14 295 - 14 295 Other assets 1 248 - 1 248 1 217 - 1 217 Transport assets 7 531 - 7 531 6 146 - 6 146 Total 47 245 - 47 245 43 081 - 43 081

107 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2016 2015 R '000 R '000

4. Property, plant and equipment (continued)

Reconciliation of property, plant and equipment - 2016

Opening Additions Disposals Total balance R'000 R'000 R'000 R'000

Buildings 3 207 321 - 3 528 Computer equipment 18 216 2 655 (575) 20 296 Furniture and office equipment 14 295 347 - 14 642 Other assets 1 217 197 (166) 1 248 Transport assets 6 146 1 385 - 7 531 43 081 4 905 (741) 47 245

Reconciliation of property, plant and equipment - 2015

Opening Additions Disposals Total balance R'000 R'000 R'000 R'000

Buildings 3 207 - - 3 207 Computer equipment 16 071 5 175 (3 030) 18 216 Furniture and office equipment 13 460 1 374 (539) 14 295 Other assets 923 295 (1) 1 217 Transport assets 4 032 3 732 (1 618) 6 146 37 693 10 576 (5 188) 43 081

Assets under investigation

There are assets which could not be found during the physical verification process at year end, that is, 31 March 2016.These assets are included in property, plant and equipment and the details are as follows:

2016 2015 R '000 R '000

Computer equipment 1 600 - Furniture and office equipment 278 - Other assets 7 -

108 EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016 NOTES TO THE ANNUAL FINANCIAL STATEMENTS 2016 2015 R '000 R '000

6. Property, plant and equipment (continued)

Pledged as security

None of the property, plant and equipment has been pledged as security.

Transitional provisions

Property, plant and equipment recognised at provisional amounts

(All figures have been rounded to the nearest thousand Rand).

In accordance with the transitional provisions as per Directive 8 of the GRAP Reporting Framework, certain property, plant and equipment with a carrying value of R47 245 (2015: R43 081) were recognised at provisional amounts. The Legislature is currently busy with a measurement project.

7. Intangible assets

2016 2015 Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation amortisation Valuation amortisation and and accumulated accumulated impairment impairment

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

Software 767 - 767 435 - 435

Reconciliation of intangible assets - 2016

Opening Additions Disposal Total balance R'000 R'000 R'000 R'000

Software 435 402 (70) 767

Reconciliation of intangible assets - 2015

Opening Total balance R'000 R'000

Software 435 435

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EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015 R '000 R '000

Pledged as security

None of the intangible assets have been pledged as security.

Transitional provisions

(All figures have been rounded to the nearest thousand Rand).

In accordance with the transitional provisions as per Directive 8 of the GRAP Reporting Framework, certain intangible assets with a carrying value of R767 (2015: R435) were recognised at provisional amounts. The Legislature is currently busy with a measurement project.

110

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015 R '000 R '000

8. Heritage assets

2016 2015

Cost / Accumulated Carrying value Cost / Accumulated Carrying value Valuation impairment Valuation impairment losses losses

R'000 R'000 R'000 R'000 R'000 R'000 Historical monuments 272 - 272 272 - 272

Reconciliation of heritage assets - 2016

Opening Total balance R'000 R'000 Historical monuments 272 272

Reconciliation of heritage assets - 2015

Opening Total balance R'000 R'000 Historical monuments 272 272

Pledged as security None of the above heritage assets have been pledged as security.

Transitional provisions Heritage assets recognised at provisional amounts

(All figures have been rounded to the nearest thousand Rand).

In accordance with the transitional provisions as per Directive 8 of the GRAP Reporting Framework, certain heritage assets with a carrying value of R272 (2015: R272) were recognised at provisional amounts. The Legislature is currently busy with a measurement project.

9. Payables from exchange transactions

Accrued bonus 6 615 6 176 Accrued expenditure 10 730 7 716 Accrued leave pay 16 585 14 616 33 930 28 508

10. Payables from non-exchange transactions Salary related payables 5 382 68

11. Operating lease liability Operating lease liability 83 98 49 15 Within one (1) year Between 2- 5 years 34 83 83 98

111

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015 R '000 R '000

11. Operating lease liability (continued)

(All figures have been rounded to the nearest thousand Rand).

The operating lease liability of R83 (2015: R98) relates to the straight-lining of lease payments. Refer to note 31 for the operating lease commitments disclosure.

The operating lease liability relates to the rental of office space from Public Investment Corporation in Cape Town. The Legislature rents office space for NCOP delegates at the National Parliament in Cape Town. The lease term is for 5 years from 1 October 2012 to 30 September 2017.The basic rental is R0.1 per square metres and escalating at 9% per annum.

112

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015 R '000 R '000

12. Provisions

Reconciliation of provisions - 31 March 2016

Opening Additions Utilised Total Balance during the year R'000 R'000 R'000 R'000

Provision for performance bonus 9 734 10 101 (9 734) 10 101

Reconciliation of provisions - 31 March 2015

Opening Additions Utilised Total Balance during the year R'000 R'000 R'000 R'000

Provision for performance bonus 7 885 9 734 (7 885) 9 734

The estimate for the performance bonus is done for all the employees who qualify and are still in the employment of the Eastern Cape Provincial Legislature. The performance bonus is only paid when the final evaluation has been done and scores have been awarded accordingly.

Therefore, the amount payable to employees is uncertain at the end of the financial year.

113

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015 R '000 R '000

13. Employee benefit obligations

The amounts recognised in the statement of financial position are as follows: Carrying value Long service award obligation 7 583 6 153

Non-current liabilities 6 630 4 723 Current liabilities 953 1 430 7 583 6 153

Reconciliation of employee benefits obligation as at 31 March 2016

Details Opening Utilised Raised during Closing balance during the the year balance year R'000 R'000 R'000 R'000

Long service award obligation 6 153 (6 153) 7 583 7 583

Reconciliation of employee benefits obligation as at 31 March 2015 Details Opening Utilised Raised during Closing balance during the the year balance year R'000 R'000 R'000 R'000

Long service award obligation 4 930 (4 930) 6 153 6 153

Changes in the present value of the long service award obligation are as follows:

2016 2015 R '000 R '000

Opening balance 6 153 4 930 Net expense recognised in the statement of financial performance 1 430 1 223 7 583 6 153

Net expense of the long service awards obligation recognised in the statement of financial performance

Actuarial gains (losses) 403 611 Benefits paid (781) (623) Current service cost 1 253 777 Interest cost 555 458 1 430 1 223

114

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

13. Employee benefit obligations (continued) Key assumptions used

Long service benefits are awarded in the form of leave days and a percentage of salary. We have converted the awarded leave days into a percentage of the employee’s annual salary. The conversion is based on a 250 working day year. Assumptions used at the reporting date are as follows

Formula used Completed Working days Fixed benefit Percentage years (Long service cash reward of annual award) (% of monthly salary basic salary) (% of annual salary)

(5/20) 5 5 - 4 (10/250+0.5/12) 10 10 50 8 (10/250+0.5/12) 20 10 50 8 (10/250+0.5/12) 30 10 50 8 65 35 150 28

Discount rate used 7.96 % 7.96 % CPI (Consumer Price Index) 5.79 % 6.33 % Expected increase in salaries 6.79 % 6.79 % Net effective discount rate 0.59 % 0.59 % Other assumptions The cost of long service award is dependent on the increase in the annual salaries paid to employees. The rate at which salaries increase will thus a direct effect on the liability of future employees.

Inflation rate

We have tested the effect of 1% change in the normal salary inflation assumption and the effects are as below:

` One One percentage percentage point point decrease increase R'000 R'000

Effect on the aggregate of the interest cost 771 854 Effect on the aggregate of the service cost 1 385 1 547 Effect on liability 7 230 7 966 Withdrawal rate We have tested the effect of 20% change in the normal salary inflation assumption and the effects are as below:

20 percentage 20 percentage point decrease point increase R'000 R'000 Effect on the aggregate of the interest cost 847 778 Effect on the aggregate of the service cost 1 536 1 397 Effect on liability 7 900 7 294 10 283 9 469

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EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

14. Revenue

Appropriation 451 399 455 468 Interest received 224 148 Public contributions and donations - 75 Sundry income 181 258 Service in-kind benefit 7 924 - 459 728 455 949

The amount included in revenue arising from exchanges of goods or services are as follows: Sundry income 181 258 Interest received 224 148 405 406

The amount included in revenue arising from non-exchange transactions is as follows: Appropriation revenue Transfer revenue Appropriation 451 399 455 468 Public contributions and donations Service - 75 in-kind benefit revenue 7 924 - 459 323 455 543

Nature and type of services in-kind are as follows:

Service in-kind (All figures have been rounded to the nearest thousand Rand).

Eastern Cape Provincial Legislature uses the office building belonging to the Eastern Cape Department of Roads and Public Works at no fee. The estimated market related rental for the similar building in Bhisho ranges between R0.085 - R0.12 per square metre.

The building is located in the most accessible area with high class furnishes which made the valuers to be able to conclude that the market rental should be R0.12 per square metre.

15. Interest received

Interest received Bank 224 148

16. Sundry income

Sundry income 181 258

The amount included in other revenue is made of : Commission from garnishee and insurance collected 171 160 Revenue from financial assets for previous years expenditure - 70 Sale of tender documents 8 9 Sale of assets < R5 2 19 181 258

116

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

17. Appropriation

Annual appropriation 391 988 391 115 Statutory appropriation 59 411 64 353 451 399 455 468

18. Public contributions and donations

Public contributions and donations - 75

Reconciliation of public contribution and donations SOPA Contribution - First National Bank - 75

Donations were received in terms of cash from various members of the public and organisations.

19. Employee related costs

Basic 164 496 148 636 Bonus 4 560 5 217 Compensative/ circumstantial allowances 1 022 568 Housing benefits and allowances 11 498 10 141 Leave pay expense 1 969 2 235 Long service awards expense 472 154 Medical aid - employer contributions 7 333 6 552 Other non-pensionable allowances 21 944 21 047 Overtime payments 365 397 Pension 35 914 32 562 Service bonus (13th Cheques) 15 920 14 756 Short term benefit 2 143 5 863 Unemployment Insurance Fund 2 148 1 752 269 784 249 880

Remuneration of Key management personnel

Remuneration of the Speaker - N Kiviet

Annual remuneration 1 141 884 Non pensionable allowance 504 390 Service bonus - 77 Contributions to medical and pension funds 257 199 1 902 1 550

Remuneration of the Speaker FD Xasa (terminated 31 May 2014)

Annual remuneration - 186 Non pensionable allowance - 69 Service bonus - 65 Contributions to UIF, medical and pension funds - 42 - 362

117

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

Remuneration of the Deputy Speaker- B Tunyiswa Annual remuneration 859 860 Non-pensionable allowance 318 320 Service bonus 62 60 Contributions to medical and pension funds 193 187 1 432 1 427

Remuneration of the Chair of Chairs - M Sokujika (appointed 1 July 2015) Annual remuneration 461 - Non-pensionable allowance 295 - Service bonus 38 - Contributions to medical and pension funds 115 - 909 -

Remuneration of Chair of Chairs - A Mtsi (terminated 30 June 2015) Annual remuneration 153 583 Non-pensionable allowance 98 382 Service bonus 13 49 Contribution to medical and pension funds 41 158 305 1 172

Remuneration of Deputy Chair of Chairs - N Ntantiso (terminated 31 May 2014) Annual remuneration - 92 Non-pensionable allowance - 66 Contributions to medical and pension funds - 25 - 183

Remuneration of Deputy Chair of Chairs - NS Nkopane (appointed 1 June 2014) Annual remuneration 570 425 Non-pensionable allowance 377 296 Service bonus 48 35 Contributions to medical and pension funds 155 118 1 150 874

118

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

Remuneration of the Secretary VW. Mapolisa (appointed 1 June 2015)

Annual remuneration 925 - Non pensionable allowance 266 - Housing allowances 41 - Service bonus 93 - Contributions to medical and pension funds 228 - Performance bonuses 37 - Acting allowance 47 47 1 637 47

Mr VW Mapolisa was acting as the Secretary of the Eastern Cape Provincial Legislature from 1 February 2015 till 31 May 2015.

Remuneration of the Secretary P Ndamase (contract expired 28 February 2015)

Annual Remuneration - 1 028 Non pensionable allowance - 319 Housing allowance - 46 Contributions to medical and pension funds - 253 Service bonus - 124 - 1 770

Remuneration of Chief Operations Officer- VW Mapolisa (terminated 31 May 2015)

Annual remuneration 141 782 Non pensionable allowance 49 274 Housing allowances 8 45 Service bonus - 65 Contributions to medical and pension funds 36 199 234 1 365

Mr VW Mapolisa was acting as the Secretary of the Eastern Cape Provincial Legislature from 1 February 2015 till 31 May 2015. His contract for Chief Operations Officer was terminated 31 May 2015.

Remuneration of Chief Operations Officer - I Netshitumbu (acting from 1 February 2015) Acting allowance 38 6

Remuneration of Chief Financial Officer - Mr M Njomba (contract expired 31 December 2015)

Annual remuneration 665 821 Non pensionable allowance 219 274 Housing allowances 37 46 Service bonus 135 99 Contributions to medical and pension funds 168 207 Performance bonuses 61 30 1 285 1 477

119

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

Remuneration of Chief Financial Officer P Ntisana (appointed 1 January 2016)

Annual remuneration 189 - Non pensionable allowance 73 - Contributions to medical and pension funds 44 - 306 -

Remuneration of Chief Parliamentary Officer - N Mene

Annual remuneration 930 861 Non pensionable allowance 292 277 Housing allowance 49 76 Service bonus 78 68 Contributions medical and pension funds 205 189 Performance bonuses 69 30 1 623 1 501

Remuneration for Members of Provincial Legislature

Annual Remuneration 35 999 33 476 Non pensionable allowance 13 405 12 026 Service bonus 2 346 3 178 Contributions to medical aid and pension funds 7 994 7 694 59 744 56 374

Remuneration of the officials

Level 17 to 21 13 133 12 524 Level 15 to 16 26 684 23 599 Level 14 14 408 12 836 Family members of key management personnel 182 337 54 407 49 296

20. Allowance for credit losses

Allowance for credit losses - 56 Decrease in provision for allowance for credit losses (416) - (416) 56

21. Transfers and subsidies

Non-profit institutions African Independent Congress (AIC) 1 724 1 574 African National Congress (ANC) 69 606 70 681 Congress of the People (COPE) 1 724 2 493 Democratic Alliance (DA) 15 468 15 122 Economic Freedom Fighters (EFF) 3 207 2 306 United Democratic Movement (UDM) 6 543 5 886 98 272 98 062

120

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

22. General expenses

Administrative fees 119 76 Advertising 3 320 2 958 Auditors remuneration 4 257 4 554 Bursaries (employees) 1 725 1 486 Catering 9 652 6 852 Communication 3 372 2 981 Computer services 6 117 4 075 Consultants, business and advisory services 1 193 794 Consumables 4 241 5 527 Contractors 556 682 Entertainment - 24 Legal services 890 1 063 Operating leases 5 818 6 051 Other operating expenditure 4 259 2 138 Property payments 309 525 Rental for service in-kind benefit 7 924 - Rental and hiring 5 275 7 646 Training and development 1 162 2 113 Travel and subsistence 47 743 43 572 107 932 93 117

23. Auditors' remuneration

Fees 4 257 4 554

24. Contracted services

Consultants 5 217 1 211

Contracted services includes the expenses as a result of using internal auditors and accountants.

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EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

25. Financial instruments disclosure

Categories of financial instruments 31

March 2016

Financial assets At amortised Total cost R'000 R'000

Cash and cash equivalents 10 465 10 465 Receivables from exchange transaction 606 606 11 071 11 071

Financial liabilities Total At amortised R'000 cost R'000

Payables from exchange transactions 33 930 33 930 Payables from non-exchange transactions 5 382 5 382 39 312 39 312

31 March 2015

Financial assets

At amortised Total cost R'000 R'000

Cash and cash equivalents 24 775 24 775 Receivables from exchange transaction 847 847 25 622 25 622

Financial liabilities

At amortised Total cost R'000 R'000

Payables from exchange transactions 28 508 28 508 Payables from non-exchange transactions 68 68 28 576 28 576

122

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015 R '000 R '000

26. Cash (used in) generated from operations

(Deficit) surplus (22 374) 8 814 Adjustments for: Loss on disposal of assets 758 4 351 Allowance for credit losses - 56 Movements in operating lease assets and liabilities (16) (83) Movements in employee benefits liability 1 430 1 223 Movements in provisions 367 1 849 Changes in working capital: Inventories (199) - Receivables from exchange transactions 240 138 Payables from exchange transactions 5 411 6 455 Payables from non-exchange transactions 5 314 61 (9 069) 22 864

27. Prior period errors

The prior year has been amended to account for prior period errors.

Below is a summary of the total effect that the prior period errors, changes in accounting policies and reclassifications of comparatives had on the amounts previously disclosed in the annual financial statements, followed by a description of each individual prior period error with the amounts involved.

Refer to note 28 for details on changes in accounting policy.

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EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

27. Prior period errors (continued) Statement of Financial Balance as Change in Prior period Reclassified Restated Performance for the year previously accounting error balance ended 31 March 2015 reported policy (note 28) Revenue R'000 R'000 R'000 R'000 R'000

Departmental revenue 1 156 - - (1 156) - Annual appropriation 400 016 (8 901) - - 391 115 Statutory appropriation 64 353 - - - 64 353 Sundry income - (517) - 775 258 Interest received - 5 - 143 148 Public contributions and - - - 75 75 donations Total revenue 465 525 (9 413) - (163) 455 949

Expenditure

Employee related costs 238 720 5 297 - 5 863 249 880 Transfers and subsidies 103 925 - - (5 863) 98 062 Capital expenditure - Tangible 7 718 (7 718) - - - assets Finance costs - 458 - - 458 Payment for financial assets 26 (26) - - - Allowance for credit losses - 56 - - 56 General expenses 92 274 1 531 523 (1 211) 93 117 Contracted services - - - 1 211 1 211 Loss on disposal of assets - 4 351 - - 4 351 Total expenditure 442 663 3 949 523 - 447 135

Operating surplus / (deficit) 22 862 (13 362) (523) (163) 8 814 Surplus / (deficit) for the year 22 862 (13 362) (523) (163) 8 814

124

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

27. Prior period errors (continued) Statement of Financial Position as at 31 March Balance as Change in Prior period Restated 2015 previously accounting error balance reported policy (note Assets 28) R'000 R'000 R'000 R'000 Current Assets

Cash and cash equivalents 24 775 - - 24 775 Receivables from exchange transactions 1 259 (412) - 847 Total current assets 26 034 (412) - 25 622

Non-current Assets

Property, plant and equipment - 43 675 (594) 43 081 Intangible assets - 435 - 435 Heritage assets - 272 - 272 Total non-current assets - 44 382 (594) 43 788

Liabilities

Current Liabilities

Payables from exchange transactions - 27 985 523 28 508 Payables from non-exchange 67 1 - 68 Operating lease liability - 98 - 98 Employee benefit obligation - 1 430 - 1 430 Provisions - 9 734 - 9 734 Total current liabilities 67 39 248 523 39 838

Non-current Liabilities

Employee benefit obligation - 4 723 - 4 723

Net Assets 25 967 (1) (1 117) 24 849

Accumulated surplus - Opening balance 25 967 (1) (1 117) 24 849 Total net assets 25 967 (1) (1 117) 24 849

1.Accruals

It was identified during the inspection of subsequent payment that some accruals were not disclosed in 2015. The additional accruals and the effects are as follows:

Accruals Increase in general expenses - 523 Increase in accrual - (523) - -

125

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

27. Prior period errors (continued)

2. Property, plant and equipment

An extensive verification of moveable assets was undertaken to enable a smooth transition to full GRAP. During this activity, assets were identified that needed to be included on the register as well as differences when comparing the registers to the financial statement disclosure notes.

During the physical verification of items of property, plant and equipment, there were assets which could not be verified and these were removed from the fixed assets register. The effect are as follows: Property, plant and equipment Understatement of computer equipment - 241 Overstatement of other machinery and equipment - (11) Overstatement of minor assets - (824) Decrease in accumulated surplus - 594 - -

28. Change in accounting policies

The Legislature has adopted Generally Recognised Accounting Practice (GRAP) as its new reporting framework, as contained in Directive 5, from 1 April 2015. The adoption is made in accordance with its transitional provisions as per Directive 8 of the GRAP reporting framework.

The Legislature has taken advantage of the transitional provisions with regards to the future measurement of certain assets for the following standards of GRAP:

GRAP 12 - Inventories

GRAP 17 - Property, plant and equipment GRAP 31 -

Intangible assets

GRAP 103 - Heritage assets

Until such time as the measurement period expires and the assets are recognised and measured, the legislature need not comply with the following Standards of GRAP in relation to which the transitional provisions are applicable:

• GRAP 1 - Presentation of Financial Statements;

• GRAP 4 - The Effects of Changes in Foreign Exchange Transactions;

• GRAP 13 - Leases;

• GRAP 18- Segment Reporting;

• GRAP 100 - Discontinued Operations.

Please refer to the respective notes for more detail on the progress made towards full compliance with the relevant standards of GRAP.

The effect of the transition was as follows:

126

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

28. Change in accounting policies (continued)

Reconciliation of net assets at 01 April 2014 (Date of transition to the new standards)

As reported Effects of GRAP under MCS transition to GRAP R'000 R'000 R'000

Property, plant and equipment - 37 693 37 693 Intangible assets - 435 435 Heritage assets - 272 272 Total non-current assets - 38 400 38 400

Receivables from exchange transactions 1 416 155 1 571 Cash and cash equivalents 10 598 - 10 598 Total current assets 12 014 155 12 169

Payables from exchange transactions 8 21 530 21 538 Operating lease liability - 181 181 Employee benefits - 4 930 4 930 Provisions - 7 885 7 885 Total liabilities 8 34 526 34 534 Net assets 12 006 4 029 16 035

Accumulated surplus 12 006 4 029 16 035

127

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

28. Change in accounting policies (continued)

Reconciliation of Statement of Financial Performance at 31 March 2015

As reported Reclassification Effects of GRAP under MCS on transition to GRAP R'000 R'000 R'000 R'000 Departmental revenue 1 156 (1 156) - - Annual appropriation 400 016 - (8 901) 391 115 Statutory appropriation 64 353 - - 64 353 Sundry income - 775 (517) 258 Interest received - 143 5 148 Public donations - 75 - 75 Subtotal 465 525 (163) (9 413) 455 949 Subtotal - (326) - - Employee costs (238 720) (5 863) (5 297) (249 880) Payment for financial assets (26) 26 - - Allowance for credit losses - - (56) (56) Finance costs - - (458) (458) Transfers and subsidies (103 925) 5 863 - (98 062) General expenses (92 274) 1 211 (1 531) (93 117) Losses on disposal of assets - - (4 351) (4 351) Contracted services - (1 211) - (1 211) Expenditure on capital assets 7 718 - (7 718) - 38 298 (137) (28 824) 8 814

Notes (All figures have been rounded to the nearest thousand Rand)

Interest received increased as a result of recognising accrued interest at year end based on the GRAP standard for recognition of revenue.

Employee costs increased due to recognition of movement employee benefits in terms of GRAP standards on Employee benefits. This also included the effects of reclassification of leave gratuity which was recognised under transfers and subsidies in MCS at R5 863 in 2015.

Allowance for credit losses was previously recognised as payments for financial assets in MCS and the amount increased due to impairment of receivables as per the GRAP standards on financial assets and liabilities. This was previously recognised at R26 in 2015 and no transactions took place in 2014.

Losses on disposal of assets was not previously recognised under MCS.

During the current year contracted services was disclosed separately, consequently the amount for 2015, of R1 211 previously recognised under general expenses, was reclassified to contracted services.

General expenses relates to goods and services expenditure which increased as a result of recognition of actuarial valuation related items, service in-kind benefit, rental expense, accrued expenses during the year based on the GRAP accrual concept.

128

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

28. Change in accounting policies (continued)

Reconciliation of net assets as at 31 March 2015

As reported Effects of GRAP under MCS transition to GRAP R'000 R'000 R'000

Property, plant and equipment - 43 081 43 081 Intangible assets - 435 435 Heritage assets - 272 272 Total non-current assets - 43 788 43 788

Receivables from exchange transactions 1 259 (412) 847 Cash and cash equivalents 24 775 - 24 775 Total current assets 26 034 (412) 25 622

Payables from exchange transactions - 28 508 28 508 Payables from non-exchange transactions 67 1 68 Employee benefits - 6 153 6 153 Operating lease liability - 98 98 Provisions - 9 734 9 734 Total liabilities 67 44 494 44 561 Total assets less total liabilities 25 967 (1 118) 24 849

Accumulated surplus 25 967 (1 118) 24 849

129

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

28. Change in accounting policies (continued)

(All figures have been rounded to the nearest thousand Rand)

Property, plant and equipment have increased due to the adoption of the recognition criteria in terms of the standard of GRAP on Property, plant and equipment. Under the modified cash basis of accounting the carrying amount of machinery and equipment was disclosed under movable tangible capital assets amounting to R32 543 in 2015 and R27 748 in 2014 respectively. Under the modified cash basis of accounting the carrying amount of buildings and other fixed structures was disclosed under immovable tangible capital assets amounting to R3 207 in 2015 and 2014.

Property, plant and equipment previously disclosed was recognised at R43 081 in 2015 and R37 693 in 2014. The capital expenditure which was expensed at R7 718 in the Statement of financial performance was recognised as additions to property, plant and equipment in 2015.

Intangible assets have increased due to the adoption of the recognition criteria in terms of the standard of GRAP on Intangible assets. Under the modified cash basis of accounting the carrying amount was disclosed under movable tangible capital assets amounting to R272 in 2015 and 2014.

Intangible assets previously disclosed was recognised at R435 in 2015 and R 435 in 2014.

Heritage assets have increased due to the adoption of the recognition criteria in terms of the standard of GRAP on Heritage assets. Under the modified cash basis of accounting the carrying amount was disclosed under intangible capital assets amounting to R435 in 2015 and 2014.

Heritage assets previously disclosed was recognised at R272 in 2015 and R 272 in 2014.

Inventories have increased due to the adoption of the recognition criteria in terms of the standard of GRAP on Inventories. Under the modified cash basis of accounting the carrying amount was disclosed under consumables amounting to R881 in 2015 and R1 207 in 2014 respectively.

The inventory was not recognised as it was impracticable to obtain the information to support the amounts disclosed.

Receivables from exchange transactions have decreased due to impairment of other receivables in terms of the standard of GRAP on Financial instruments amounting to R847 in 2015 and R984 in 2014. The carrying amount has also increased as a result of the interest accrued at year end as a result of adoption of GRAP amounting to R5 in 2015 and R13 in 2014 respectively.

Payables from exchange transactions have increased due to the adoption of the recognition criteria in terms of GRAP. Under the modified cash basis of accounting the carrying amount of accruals and payables was disclosed under accruals and payables not recognised amounting to R28 508 in 2015 and R21 530 in 2014 respectively.

Under the modified cash basis of accounting the carrying amount of leave entitlement, service bonus and capped leave commitments were disclosed under employee benefits amounting to R20 792 in 2015 and R17 854 in 2014 respectively.

Under the modified cash basis of accounting the carrying amount of performance awards were disclosed under employee benefits amounting to R9 734 in 2015 and R7 885 in 2014 respectively. No actuarial valuation of long service awards was done.

Operating lease liability has increased due to the adoption of the recognition and measurement criteria in terms of the standard of GRAP on Leases. Under the modified cash basis of accounting nothing was recognised or disclosed in terms of the operating lease liability.

130

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

28. Change in accounting policies (continued)

Reconciliation of amounts previously disclosed under the modified cash basis of accounting as at 31 March 2015

Details Disclosed per Prior period Effects of GRAP GRAP MCS error (Note 27) transition R’000 R’000 R’000 R’000

Property, plant and equipment 43 675 (594) - 43 081 Heritage assets 272 - - 272 Intangible assets 435 - - 435 Total assets 44 382 (594) - 43 788 Payables from exchange transactions (7 194) (523) (20 791) (28 508) Employee benefits (30 526) - 24 373 (6 153) Provision - - (9 734) (9 734)

6 662 (1 117) (6 152) (607) Notes

(All figures have been rounded to the nearest thousand Rand)

Property, plant and equipment Under the modified cash basis of accounting the carrying amount of machinery and equipment was disclosed under movable tangible capital assets amounting to R32 543 in 2015 and R27 748 in 2014 respectively. Under the modified cash basis of accounting the carrying amount of buildings and other fixed structures was disclosed under immovable tangible capital assets amounting to R3 207 in 2015 and 2014.

Property, plant and equipment previously disclosed was recognised at R43 081 in 2015 and R37 693 in 2014 including the building and other fixtures.

The capital expenditure which was expensed at R7 718 in the statement of financial performance was recognised as additions to property, plant and equipment in 2015.

Accruals Under the modified cash basis of accounting the carrying amount of accruals and payables was disclosed under accruals and payables not recognised amounting to R28 508 in 2015 and R21 530 in 2014 respectively.

Additional accruals amounting to R521 were recognised in 2015.

Employee benefits Under the modified cash basis of accounting the carrying amount of leave entitlement, service bonus and capped leave commitments were disclosed under employee benefits amounting to R20 792 in 2015 and R17 854 in 2014 respectively.

131

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000 Under the modified cash basis of accounting the carrying amount of performance awards were disclosed under employee benefits amounting to R9 734 in 2015 and R7 885 in 2014 respectively. No actuarial valuation of long service awards was done.

Due to GRAP conversion long service awards actuarial valuation was performed and an obligation was determined and recognise in 2015: R6 153 (2014: R4 930).

During the current year the leave gratuity amounting to R5 863 in 2015 was reclassified from transfers and subsidies to employee related cost.

Refer to note 27 for details on the prior period errors.

132

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

29. Going concern

(All figures have been rounded to the nearest thousand Rand).

The annual financial statements were prepared on a going concern basis. This basis presumes that the legislator 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. Secretary has reviewed the Legislature's ability to continue as a going concern for the year to 31 March 2017 and, in the light of this 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 Legislature is wholly dependent on the receipt of equitable share from National treasury of R462 189 for continued funding of operations for the 2016/17 financial year. This funding has been approved as per the Medium Term Expenditure Framework of the Eastern Cape.

30. Events after the reporting date

(All figures have been rounded to the nearest thousand Rand) Non adjusting event after the reporting date was identified.

 The Legislature appointed Dimension Data for upgrading of the parliamentary chamber.  The contract will be effective from 1 April 2016 worth R16 680.

133

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

31. Commitments

Authorised operational expenditure

Approved and contracted for:  Operational expenditure 16 840 8 271

Total operational commitments Already contracted for but not provided for 16 840 8 271

Operating leases - as lessee (expense)

Minimum lease payments due

- within one year 3 782 4 393

- in second to fifth year inclusive 5 618 2 034

9 400 6 427

(All figures have been rounded to the nearest thousand Rand).

Operating lease payments represent rentals payable by the Legislature for certain buildings, other fixed structures, machinery and equipment. No contingent rent is payable.

The Legislature uses Eastern Cape Department of Roads and Public Works buildings at no charge.

The Legislature is also leasing office space for National Council of Provinces delegates for Eastern Cape permanently based at National Parliament in Cape Town. National Council of Provinces Committee - is made up of delegates from all the provinces. These offices are rented for delegates from Eastern Cape permanently based in Cape Town. The lease term is for 5 years from 1 October 2012 to 30 September 2017. The basic rental is R0.1 per square metres and escalating at 9% per annum.

Hambanathi Hambanathi was appointed for 3 years as from 1 October 2015 till 31 September 2018.The parties agreed to the transaction fees as contained in the tender documents and this will be adjusted by 10% at each anniversary of this agreement except those that are charged as a percentage to the total transaction amount which will not be subject to review.

Telkom Telkom was appointed to provide telecommunication services for further five (5) years from 3 July 2014. The initial contract was entered on 1 July 2008.

134

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

32. Related parties

` Relationships Presiding officers Refer to note 19 Secretary Refer to note 19 Chief Operations Officer Refer to note 19 Chief Financial Officer Refer to note 19 Chief Parliamentary Officer Refer to note 19 Government department Eastern Cape Department of Roads and Public Works State-owned entity Eastern Cape Development Corporation

Related party involved Rent paid Benefits Closing received balance R'000 R'000 R'000

Eastern Cape Development Corporation 65 - 65 Eastern Cape Department of Roads and Public Works 15 7 924 7 939 80 7 924 8 004

The Legislature is utilising buildings owned by the Eastern Cape Department of Roads and Public Works for which the market related rental was determined and this is reflected in Note 14.

The Legislature paid house rental to the Department of Roads and Public Works during the year.

The Legislature was renting the warehouse for storage purposes from Eastern Cape Development Corporation till 31 May 2015.

33. Contingent liabilities Contingent liabilities 4 429 2 800

2016 (All figures have been rounded to the nearest thousand Rand).

K. Hoho vs Eastern Cape Provincial Legislature - Management's estimate of the financial exposure amounts to R638. This is a claim against the Legislature.

K. Hoho vs Eastern Cape Provincial Legislature - The claim for damages amounts to R2 600. This is a claim against the Legislature.

P Hobongwana vs Eastern Cape Provincial Legislature - The claim made is R1 191. This is a claim against the Legislature.

2015 (All figures have been rounded to the nearest thousand Rand).

The amount is made up of claims against the Legislature to the extent of R2 800.

135

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

34. Risk management Financial

risk management

The Legislature’s activities expose it to a variety of financial risks: credit risk and liquidity risk and market risk (e.g. currency risk, fair value interest rate risk, cash flow interest rate risk and price risk).

Liquidity risk

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.

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 twelve months equal their carrying balances as the impact of discounting is not significant.

Less than 1 Between 1 Between 2 Over 5 years year and 2 years and 5 years R'000 R'000 R'000 R'000 Payables from exchange transactions 33 930 - - - Payables from non-exchange transactions 5 382 - - - At 31 March 2015 Less than 1 Between 1 Between 2 Over 5 years year and 2 years and 5 years R'000 R'000 R'000 R'000

Payables from exchange transactions 28 508 - - - Payables from non-exchange transactions 68 - - - Credit risk

Credit risk consists mainly of cash deposits, cash equivalents and receivables. The Legislature only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Receivables comprise of staff debtors. Management evaluated credit risk relating to receivables on an ongoing basis. If receivables are independently rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of the receivable, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by management.

Financial assets exposed to credit risk at year end were as follows:

` Financial instrument 31 March 2016 31 March 2015 Cash and cash equivalents 10 465 24 775 Receivables from exchange transactions 606 847 (All figures have been rounded to the nearest thousand Rand).

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.

136

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000

Foreign exchange risk

The Legislature does not hedge foreign exchange fluctuations and has limited exposure to foreign exchange risk.

35. Irregular expenditure 2016 2015 R’000 R’000 Add: Irregular expenditure - current year 2 191 -

Details of irregular expenditure – current year Details GRAP Conversion The Legislature did not follow a competitive 2 191 bidding process which resulted in the appointment of Altimax, for an amount of R3.6 million, being irregular

36. Fruitless and wasteful expenditure

Telkom SA 2 - Auditor General SA 1 - Add: Irregular expenditure - current year 3 -

Telkom SA

Interest incurred on a telephone account is as a result of current year budget being depleted before year end.

Auditor-General of South Africa

Interest was incurred on late payment of invoices. The delays in payment was as a result of queries that were raised by the Legislature on the contents of the invoice.

137

EASTERN CAPE LEGISLATURE PROVINCIAL LEGISLATURE VOTE 2 ANNUAL FINANCIAL STATEMENTS FOR YEAR ENDED 31 MARCH 2016

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

2016 2015

R '000 R '000 28. Budget

Material differences between budget and actual amounts (All figures have been rounded to the nearest thousand Rand).

Departmental revenue

The budgeted departmental revenue of R367 is included in the appropriated amount of R474 229. However, the Legislature has over collected from the sale of assets, sale of tender documents.

Employee related costs

The contributing factor of the over expenditure is as a result of insufficient budget allocated for salaries for Members of the Legislature which is direct charge against provincial revenue. The Legislature does not budget for the salaries related cost as section 58(3) of the Constitution states that salaries, allowances and benefits payable to Members of Provincial Legislature are a direct charge against provincial revenue.

Transfers and subsidies

The transfers include the payment of leave gratuities to employees of the Legislature who have resigned or those that have been terminated due to natural attrition during the financial, as this is unforeseen no provision was made during budget process.

Payment for Financial assets

The payment for financial assets relates to the write off of a debtor.

Goods and services

Not all payments were made by year end and have been raised as accruals hence the under expenditure.

Capital expenditure

This is affected by subsequent payment of assets received in the previous period which were reported as accruals. The budget does not take into account accruals which existed at the end of the previous period.

(All figures have been rounded to the nearest thousand Rand)

Explanation for the basis of budget preparation

The Legislature’s budget is approved on a cash basis by functional classification. The approved budget covers the financial year from 01 April 2015 to 31 March 2016. The budget and the basis of accounting differ.

The financial statements are prepared on the accrual basis using a classification based on the nature of the expenses and carrying values in the statement of financial performance and the statement of financial position. Adjustments to the amounts in the financial statements for timing differences associated with the continuing appropriations were made to express the accrual amounts on a comparable basis to the final approved budget.

Reconciliation between the actual amounts on a comparable basis as presented in the Statement of Comparison of Budget and Actual Amounts and the actual amounts in the Statement of Cash Flows for the year ended 31 March 2016 is presented on the reconciliation above. The financial statements and the budget documents are thus prepared for the same period, but there is a basic difference in that the budget is prepared on a cash basis and the financial statements on the accrual basis.

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1. Report of the AFRICAN NATIONAL CONGRESS

Since the dawn of 1994, the ANC continue to ensure that legislators produce effective and efficient legislative pieces of legislations. These progressive legislative instruments give meaning to creation of non-racial, non- sexiest, democratic, united and prosperous South Africa. It also understood that people and communities are their own agents of change hence public participation is important. As best captured by Lyndon B Johnsons back as in 1965, “You do not wipe away the scars of centuries by saying: Now you are free to go where you want, and do as you desire, and choose the leaders as you please. You do not take a person who for years has been hobbled by chains and liberate him, bring him up to the starting line of the race and then say, ‘you are free to compete with all the others,’ and still justly believe you have been completely fair’’, therefore oversight of executive is in ensuring that government of the people develop and implement programs which fasten liberation of the people in every respect.

ANC on every term of Legislature deploys contingent of its MPL’s to discharge this revolutionary task, supported by proportional determined number of Caucus Support Service officials for their effective and diligently support. This 5th term of Provincial Legislature is no different.

While the political reporting line and accountability are clear for ANC, this report of ANC Caucus 2015/16 report will mainly cover the political administrative matters covering programs, activities, outputs and impact of the ANC Caucus for year under review. With reference to the mandate of Caucus, political party representation in the legislature, deployment, Caucus work, committee work, constituency work and well as caucus administrative matters.

Each National and lower organs Conferences of ANC have sought to give impression and guide on how ANC Causes at every sphere must be positioning themselves in discharging their constitutional mandate.

The last National 53rd conference of the ANC made specific resolutions on strengthening of legislatures and governance. In this regard, it resolved on developing a more activist people-centred model of legislatures and strengthening of legislatures as part of building a developmental state amongst others.

______Hon Mrara ANC Chief Whip

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Overview on Caucus Mandate

ANC Constitution defines "caucus" to mean an organised group of public representatives of the same political party which exists as a structure or institution at each respective sphere of governance and which meets privately to discuss policy, issues pertaining to voting and strategies in preparation for open meetings with other political parties where such policies are discussed and voting takes place;

In terms of Rule 5.2k of the ANC Constitution, further alludes that, it is the duty of ANC members who hold elective office in any sphere of government to be members of the appropriate caucus, to function within its rules and to abide by its decisions under the general provisions of the Constitution and the constitutional structures of the ANC.

The Members of the ANC Caucus at all levels of their deployment, derive their broad mandates from Caucus. At all material times such mandates will be consistent with resolutions of the ANC constitutional structures. The sum total of ANC members of the Provincial Legislature, including the Premier and members of the executive council (MEC) constitute the ANC Caucus. The Caucus is a very important structure and its attendance is compulsory to all ANC public representatives. The ANC Caucus consists of all ANC Members of Parliament.

The principal tasks of caucuses of political parties are to keep MP`s of each political formation informed about the parliamentary programme and to enable the MP`s to discuss and agree on the approach of their parties to all matters on the parliamentary agenda. They also serve as the organ within which those elected by Caucus to parliamentary positions account to the organisation as well as serving as institutions that ensures the accountability of members of Caucus.

Caucuses also serve as the point of contact between the MPL’s and the leadership of the ANC. Caucuses manage the work of the study groups, which play the role of portfolio committee caucuses, and are therefore sub-structures of the Caucus. As stated above Committee and Study Group chairs report to Caucus through the Chief Whip. The ANC Caucus carries out the above functions under the supervision of the Political Committee.

Constitution of the ANC further entrust the Provincial Executive Committee of the ANC with authority Powers and duties on section 19.9.8 to ‘’Supervise and direct the work of the ANC and all its organs in the Province, including the ANC provincial and local government caucuses’’. While the Provincial Working Committee shall ‘’Conduct the current work of the ANC in the province and ensure that regions, branches and all other ANC structures, such as parliamentary caucuses, carry out the decisions of the ANC’’.

On its resolution of the 53rd Conference of the ANC asserted that:

 Caucuses play an important role in coordinating legislative approaches to ANC policy, and the oversight and monitoring of policy implementation. Caucuses, together with the constitutional structures, are also responsible for the deployment of ANC public representatives to constituencies.  Caucuses should also assist the TGO at all levels by encouraging public representatives to collect and monitor payment of levies. Firm action should be taken against members who do not pay their levies.  Caucuses are important links between the constitutional structures of the ANC and government. To strengthen the coordinating and leadership role of Caucuses, Conference resolves the following:

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Party representation in the Legislature

The African National Congress in the Eastern Cape won the 2014 general elections with a resounding 71.4% vote. This translated into forty five seats in the provincial Legislature as compared to forty four in the fourth term. What is important to note is the nature of the change of the political landscape with regard to opposition parties in the legislature. In the fourth term political parties represented in the legislature were as follows: ANC 44, COPE 9, DA 6, UDM 3, and AIC 1.

In the current term representation in the legislature is as follows: ANC 45, DA 10, UDM 4, EFF 2, AIC1 and COPE 1. The ANC gained 1 seat, COPE lost 8 seats, the DA gained 4 seats to become the official opposition, the new entrant EFF has 2 seats, UDM gained 1 and AIC remained with 1. It is important for the caucus Lekgotla to take note of this trend as it contributes to the work of strengthening the ANC in the province.

Deployment of Members

Chief Whip

On giving effect to the resolution of the 53rd Conference in that deploying leadership to the Caucuses, ANC resolved to deploy senior cadres of the movement, particularly but not exclusively, those who serve in the leadership organs of the ANC, Therefore ANC deployed Hon Mrara as Chief Whip of ANC since beginning of the 5ht Legislature term, with Deputy Chief Whip being Hon K. Fihlani

The Whippery Whips are appointed by the Presiding Officers on the recommendation of the political parties. The Chief Whip is the most senior Whip and a member of the majority party.

The Whippery is the custodian of party discipline and mandate. All political parties appoint Whips who are responsible for organising participation of their respective parties in various activities of the Provincial Legislature. Whips must ensure that the party administration operates effectively. Mangaung resolutions prescribe that the Chief Whips office in all three (3) spheres of government should be the centre of decision making and should be appropriately resourced. The conference further resolved that Chief Whips in all three spheres of government should work more effectively together (Chief Whips Forum).

The Whippery is divided into subcommittees allocated various responsibilities as follows:

Whippery Sub-committees PORTFOLIO MEMBER House Whip Hon M. Saziwa & N Kontsiwe Internal Affairs, Administration & Finance Hon N Ponco & P Mpushe Programming Hon M Mrara & Hon K Fihlani (Chief Whip & Deputy Chief Whip) Constituency & Research Hon N Mvana Portfolio Committees & Study Groups Hon Fihlani Communication & Media Hon M Mrara Disciplinary Committee Hon M Saziwa & Hon N Tunyiswa Members Enabling Facilities Hon K Fihlani

Presiding Officers The Speaker presides over meetings and debates and ensures that the MPLs can freely participate in debates while keeping to the Rules of the House. The Speaker is assisted by a Deputy Speaker who takes on these

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responsibilities in the absence of the Speaker. Both the Speaker and the Deputy Speaker are elected by the MPLs through their Political Party mandate.

Presiding Officers PORTFOLIO MEMBER Speaker Hon N Kiviet Deputy Speaker Hon B Tunyiswa Chairperson of Committees Hon M Sokujika Deputy Chairperson of Committees Hon N Nkopane

A Chairperson and Deputy Chairperson of Committees support the Presiding Officers by co-ordinating the functioning of the committees in the Legislature.

The Leader of Government Business

The Leader of Government Business is a Member of the Executive Council (MEC) who is appointed by the Executive Council to represent it in the Legislature. The Leader of Government Business serves as a crucial link between the Legislature and the Executive Council/ Committee. The Leader of Government Business for the Fifth Term is MEC Helen Sauls-August.

The Leader of Government Business has the responsibility to coordinate the programme of the EXCO (Executive Committee) and the Legislature. The office of the Leader of Government Business further ensures:  coordination of proposed provincial Bills for submission to the EXCO and the Legislature,  places NCOP legislative processes before the EXCO for consideration,  facilitates the establishment and coordination of a network of Parliamentary Liaison Officers (PLOs) to ensure timeous submission of good quality responses to the Legislature resolutions, questions and petitions  analyse Legislature resolutions, questions and petitions and integrate into government service delivery initiatives  monitor the implementations of Legislature resolutions by government departments  Ensure that the MECs are informed of the Legislature programme and the requirements of the Legislature.  Ensure that an MEC is in the House when required and that all reports and documentation that must be tabled by MECs are tabled on time and in the correct format.

5. Portfolio Committees Portfolio committee work is the engine of oversight work of the legislature. All portfolio committees of the Eastern Cape provincial legislature except for Scopa are chaired by ANC MPLs. Scopa is chaired by Mr Mhlati of the UDM. Each portfolio committee is allocated a portfolio committee coordinator and a researcher who are both legislature employees. In addition to this support researchers of the ANC to provide technical support of the study groups of ANC.

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Below is the list of ANC MPL’s and various committees they are serving

The Rules Committee and its sub-Committees.

Rules Committee The composition of the Rules Committee is as provided for in Rule 52.1 of the Standing Rules of the Legislature.

No. Member Political party 1 Kiviet, N (Chairperson) ANC 2 Tunyiswa, B ANC 3 Mrara, M (Responsible Whip) ANC 4 Fihlani, K ANC 11 Lwana, V ANC 13 Gade, F ANC 14 Mvana, N ANC 15 Gqobana, S ANC 16 Mlombile-Cingo, N ANC 17 Peter, M ANC 18 Sokujika, M ANC 19 Nkopane, N ANC 20 Abraham-Ntantiso, N ANC

The Whips Committee

The Whips Committee is established in terms of Rule 57 and consists of Whips nominated by various political parties. The formula for the appointment of the Whips is adopted by the first meeting of the Rules Committee at the beginning of each term.

No. Name Political party 1 Mrara, M (Chairperson) ANC 2 Fihlani, K ANC 3 Ponco, A ANC 4 Tunyiswa, N ANC 5 Mvana, N ANC 6 Mpushe, P ANC 7 Saziwa, M ANC 8 Kontsiwe, N ANC 9 Lwana, V ANC 10 Ndamase, M ANC

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7. Portfolio Committees These Committees must be known by the name assigned to them by the Rules Committee. The Chairpersons of Portfolio Committees are appointed by the Rules Committee in line with Rule 66 of the Standing Rules of the Legislature.

No Name of a Committee Chairperson 1 Chairperson of Committees Mzuyanda Sokujika 2 Deputy Chair of Chairs Ntombovuyo Nkopane 3 Chief Whip Mzoleli Mrara 4 Deputy Chief Whip Kholiswa Fihlani 5 Chairperson Ad Hoc Committee on Law Review Kholiswa Fihlani 6 Portfolio Committee on Education Fundile Gade 7 Portfolio Committee on Health Mxolisi Dimaza 8 Portfolio Committee on Sports, Recreation, Arts and Vuyani Limba Culture 9 Portfolio Committee on Roads and Public Works Nomvuzo Cingo-Mlombile 10 Portfolio Committee on Human Settlement Busisiwe Ndlangisa-Makaula 11 Portfolio Committee on Transport Tamara Xhanti 12 Portfolio Committee on Finance Xolile Nqatha 13 Portfolio Committee on the Office of the Premier Sicelo Gqobana 14 Portfolio Committee on Co-operative Governance & Mninawa Nyusile Traditional Affairs 15 Portfolio Committee on Social Development Christian Martin 16 Portfolio Committee on Economic Development and Tony Duba Environmental Affairs 17 Portfolio Committee on Agriculture Nomawethu Gqiba 18 Portfolio Committee on Safety and Liaison Michael Peter 19 Legislature Oversight Committee Noxolo Abraham-Ntantiso 20 Women’s Caucus Nomalinde Deborah Komose 21 Public Participation, Petitions and Public Education Fezeka Bayeni Committee 22 Special Programmes Committee Nomxolisi Mtitshana.

Clustering of Committees

Classification of the Committees into clusters

The classification of Committees into clusters is important for purposes of programming. Portfolio Committees within the same cluster sits at the same time and Members cannot belong to more than one Committee falling in the cluster.

The above principle does not apply to Committees listed under the column, “other”.

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The above Committees are clustered as follows: Social Needs Cluster Economic Needs Cluster Governance Cluster Other Education Economic Development Office of the Premier Executive Committee Health Transport Finance and Provincial Rules Committee and its Expenditure sub-committees Social Development Roads and Public Works Co-operative Whips Committee governance and Traditional Human Settlements Agriculture Budget and Oversight Safety and Liaison Special Programmes Committee Sport, Recreation, Arts Public Participation, and Culture Petitions and Education Ad Hoc Committee on Law Review Programming Committee Ethics Committee Woman Caucus Public Accounts Committee Special Programs Committee

Cluster Chairpersons No Cluster Chairperson 1 Social Needs Cluster F Gade 2 Economic Needs Cluster N Mlombile- Cingo 3 Governance Needs Cluster X Nqatha

Membership to various Committees

Portfolio Committee on the Office of the Premier No Name Political party 1 Gqobana, S (Chairperson) ANC 2 Saziwa, M (Whip) ANC 3 Mpushe, P ANC 4 Martin, C ANC 5 Ngcolomba, T ANC 6 Makaula, B ANC 7 Lwana, V ANC 8 Tunyiswa, N ANC 9 Gqiba, N ANC 10 Mvana, N ANC

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Legislature Oversight Committee No Name Political party 1 Noxolo Abraham-Ntantiso (Chairperson) ANC 2 Mvana, N (Whip) ANC 3 Nqatha, X ANC 4 Tunyiswa N. ANC 5 Duba, T ANC 6 Bayeni, F ANC 7 Martin, C ANC 8 Gqiba, N ANC 9 Mtitshana, N ANC

Portfolio Committee on Health No Name Political party 1 Dimaza, M (Chairperson) ANC 2 Saziwa, M (Whip) ANC 3 Nqatha, X ANC 4 Gqiba, N ANC 5 Xhanti, T ANC 6 Ponco, AN ANC

Portfolio Committee on Social Development No Name Political party 1 Martin, C (Chairperson) ANC 2 Kontsiwe, N (Whip) ANC 3 Lwana, V ANC 4 Duba, T ANC 5 Ndamase, P ANC 6 Botha, K DA 7 Tsengwa, DT UDM 8 Peter, S EFF

Portfolio Committee on Roads and Public Works No Name Political party 1 Mlombile-Cingo, N (Chairperson) ANC 2 Mpushe, P (Whip) ANC 3 Abraham-Ntantiso, N ANC 4 Saziwa, M ANC 5 Limba, V ANC 6 Bayeni, F ANC 7 Gqobana, SH ANC

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Portfolio Committee on Education No Name Political party 1 Gade, F D (Chairperson) ANC 2 Mpushe, P (Whip) ANC 3 Ngcolomba, T (alternate Member) ANC 4 Abraham-Ntantiso, N ANC 5 Tinta, T ANC 6 Sokujika, M ANC

Portfolio Committee on Co-operative Governance and Traditional Affairs. No Name Political party 1 Nyusile, M (Chairperson) ANC 2 Ndamase, M (Whip of the Committee) ANC 3 Gade, F ANC 4 Ndamase, P ANC 5 Mlombile-Cingo, N ANC 6 Xhanti, T ANC 7 Komose, D ANC 8 Peter, M ANC

Portfolio Committee Rural Development and Agrarian Reform No Name Political party 1 Gqiba, N (Chairperson) ANC 2 Tunyiswa N (Whip) ANC 3 Komose, D ANC 4 Mvana, N ANC 5 Nyusile, M ANC 6 Mtitshana, M ANC 7 Ngcolomba, T ANC

Portfolio Committee on Economic Development and Environmental Affairs No Name Political party 1 Duba, T (Chairperson) ANC 2 Lwana V (Whip) ANC 3 Ndamase, P ANC 4 Kontsiwe, N ANC 5 Nqatha, X ANC 6 Tinta, T ANC 7 Martin, C ANC 8 Fihlani, K ANC

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Portfolio Committee on Transport No Name Political party 1 Xhanti, T (Chairperson) ANC 2 Ponco, A (Whip) ANC 3 Dimaza, M ANC 4 Ndamase, M ANC 5 Gade, FD ANC 6 Peter, M ANC 7 Makaula, B ANC

Portfolio Committee on Human Settlements No Name Political party 1 Makaula B (Chairperson) ANC 2 Ndamase, M (Whip) ANC 3 Gqobana, S ANC 4 Fihlani, K ANC

Portfolio Committee on Finance and Provincial Expenditure No Name Political party 1 Nqatha, X (Chairperson) ANC 2 Ponco, A (Whip) ANC 3 Kontsiwe, N ANC 4 Tinta, T ANC 5 Mtitshana, N ANC 6 Duba, T ANC 7 Bayeni, F ANC 8 Dimaza, M ANC 9 Abraham- Ntantiso, A ANC 10 Limba, V ANC 11 Fihlani K ANC

Portfolio Committee on Sport, Recreation, Arts and Culture No Name Political party 1 Limba, V (Chairperson) ANC 2 Mvana, N (Whip) ANC 3 Bayeni, F ANC 4 Mtitshana, N ANC 5 Komose, D ANC 6 Ngcolomba, T ANC

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Portfolio Committee on Safety and Liaison No Name Political party 1 Peter, M (Chairperson) ANC 2 Tunyiswa, N (Whip of the Committee) ANC 3 Mlombile-Cingo, N ANC 4 Nyusile, M ANC 5 Nkopane, N ANC

Public Accounts Committee No Name Political party 1 Mhlati, MM (Chairperson) UDM 2 Fihlani, K (Whip) ANC 3 Nqatha, X ANC 4 Dimaza, M ANC 5 Gqobana, S ANC 6 Sokujika, M ANC 7 Peter, MM ANC 8 Mtitshana, N ANC 9 Martin, C ANC 10 Mlombile-Cingo ANC 11 Ponco, N ANC 12 Kontsiwe, N ANC 13 Bayeni, F ANC

Public Participation, Petitions and Public Education No Name Political party 1 Bayeni, F (Chairperson) ANC 2 Kontsiwe, N (Whip ANC 3 Makaula, B ANC 4 Peter, M ANC 5 Sokujika, M ANC 6 Nyusile, M ANC 7 Ponco, AN ANC 8 Xhanti, T ANC 9 Gqobana, S ANC 10 Mpushe, P ANC 11 Tunyiswa, N ANC

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Women’s Caucus

In terms of Rule 58.1, the Women’s Caucus consists of all female members of the Legislature including members of the Executive Council of the Province. Members of the Women’s Caucus are as follows:

No Name Political party 1 Komose, D (Chairperson) ANC 2 Kontsiwe, N (Whip) ANC 3 Sauls-August, H ANC 4 Dyantyi, P ANC 5 Fihlani, K ANC 6 Gqiba, N ANC 7 Kiviet, N ANC 8 Abraham-Ntantiso, N ANC 9 Majodina, P ANC 10 Marawu, T ANC 11 Mlombile- Cingo, N ANC 12 Mpushe, P ANC 13 Mtitshana, N ANC 14 Mvana, N ANC 15 Ndlangisa-Makaula, B ANC 16 Bayeni, F ANC 17 Nkopane, N ANC 18 Ponco, A ANC 19 Sihlwayi, N ANC 20 Tikana, W ANC 21 Tunyiswa B ANC 22 Xhanti, T ANC

Programming Committee The Programming Committee is established in terms of Rule 56 and its membership is provided for in Rule 56.1.1

No Name Political party 1 Tunyiswa, B (Chairperson) ANC 2 Mrara, M (Whip) ANC 3 Sauls-August, H ANC 4 Fihlani, K ANC 5 Nkopane, N ANC 6 Abraham-Ntantiso, N ANC 7 Sokujika M. ANC 8 Mpushe P. ANC

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Special Programmes Committee No Name Political party 1 Mtitshana, N (Chairperson) ANC 2 Mpushe, P (Whip) ANC 3 Mvana, N ANC 4 Saziwa, M ANC 5 Ndamase, P ANC 6 Gqiba, N ANC 7 Xhanti, T ANC 8 Limba, V ANC 9 Komose, D ANC

Ad Hoc Committee on Law Review No Name Political party 1 Fihlani, K (Chairperson) ANC 2 Saziwa M. (Whip) ANC 3 Kontsiwe N. ANC 4 Bayeni, F ANC 5 Knoetze, V DA

Ethics Committee

The Ethics Committee is established in terms of Rule 55 and consists of 3 Members appointed by the House. No Name Political party 1 Tunyiswa, B (Chairperson) ANC 2 Saziwa M ANC

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Committee of Chairpersons No Name Committee 1 Mzuyanda Sokujika Chairperson 2 Ntombovuyo Nkopane Deputy Chairperson 3 Fundile Gade Portfolio Committee on Education 4 Mxolisi Dimaza Portfolio Committee on Health 5 Vuyani Limba Portfolio Committee on Sports, Recreation, Arts and Culture 6 Nomvuzo Cingo-Mlombile Portfolio Committee on Roads and Public Works 7 Busisiwe Ndlangisa-Makaula Portfolio Committee on Human Settlement 8 Tamara Xhanti Portfolio Committee on Transport 9 Xolile Nqatha Portfolio Committee on Finance 10 Sicelo Gqobana Portfolio Committee on the Office of the Premier 11 Mninawa Nyusile Portfolio Committee on Co-operative Governance & Traditional Affairs 12 Christian Martin Portfolio Committee on Social Development 13 Tony Duba Portfolio Committee on Economic Development and Environmental Affairs 14 Nomawethu Gqiba Portfolio Committee on Agriculture 15 Michael Peter Portfolio Committee on Safety and Liaison 16 Noxolo Abraham-Ntantiso Budget and Oversight 17 Nomalinde Deborah Komose Women’s Caucus 18 Fezeka Nkomonye Public Participation, Petitions and Public Education Committee 19 Masiza Mhlati Public Accounts Committee 20 Esther Nomxolisi Mtitshana Special Programmes Committee 21 Mzoleli Mrara Chief Whip 22. Kholiswa Fihlani Deputy Chief Whip (Whip).

Caucus activities

Whippery Work The ANC Caucus Whippery consists of ten members led by the Chief Whip and his deputy. The Chief Whip of the majority party is the leader of the party in the Legislature and Whips are equally the leaders of the party in the Legislature. The role & responsibility of the Whippery is two pronged into the institutional as well as the political party role.

Institutional Role Chief Whip and Whips are members of important Political Management Committees created in the Standing Rules. Whips must ensure that ANC interests and positions are confirmed in those management committees. Chief Whip chairs the multi-party Whips Committee. Current practice is that the Chief Whip of the majority party is the Chief Whip of the Legislature. This makes it possible for the majority party to assume its political responsibility which is to lead the implementation of government’s (the majority party) programmes and policies. The Chief Whip must maintain the dignity of Parliament and the Legislature. The Whippery through the office of the Chief Whip (OCW) ensures the effective development and implementation of the legislative programme by doing the following:

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 Liaison with the Executive through the Leader of the House;  Facilitates the appointment of special delegates to the National Council of Provinces;  Act as a political liaison officer to the parliamentary parties;  Arrange the number and order of Members who wish to speak in debate.

Party Political Role

The Whippery is entrusted with the role of the political and administrative management of ANC caucus business in the legislature and government. It does this by amongst others:  Ensuring the political management of members and their participation in the institution.  Overall responsibility for management caucus and constituency funds;  Management of party staff;  Provide support for party caucus meetings and consultations, party study groups, arranging party membership of parliamentary committees and organising any party balloting that may be required. Allocates offices in the Legislature and seats in the House;  Ensuring the attendance of party members of House programmes, especially for divisions and quorum calls;  Working with other Whips, to arrange a replacement (a “pair”) for members who are (or will be) absent from the House;  Liaise with the Leader of the House in ensuring that the timetable for the Government’s legislative programme is met;  Regularly moving procedural motions such as the motion for closure;  Keeping members informed about the business of Parliament and the Legislature;

Milestones of Caucus Work

Strengthening of the Office the Chief Whip and Constituency work: The 53rd Conference of the ANC resolved that the Chief Whip’s Offices in all spheres of government should be the centre of decision making and should be appropriately resourced. The Caucus have thus moved to fill the position of Head of Caucus and its engaged with Legislature on the process of resourcing the office of Chief Whip as a Whip of the Legislature and enhance its capacity. As reported on financial section on PCO tools of trade and furniture were provided and program of Constituency Detachment was launched.

Political Management It can be reported with proud that the ANC Caucus has asserted its hegemony during the period under reporting. This is attested to by the declaration of Mondays and Fridays as ANC constituency days. The ANC in the Eastern Legislature has further asserted its authority in the institution as could be attested to the Taking Legislature to Port Elizabeth from in 2015. That programme saw members of the ANC united in action against manoeuvres by the opposition. Caucus utilised a strategy of including MECs in debates.

Caucus resolved that government departmental branding must be reflective of the symbols of the ANC without any compromise. Legislature has been rebranded and reflect progressive colours.

Cooperative governance to promote ANC Caucuses roles across all three spheres The national Chief Whips’ forum has been convened a number of times since the start of the new term. In this forum matters of deployment, staffing and constituency work were discussed. The Whippery has also convened a provincial Chief Whips’ Forum which was well attended. In this forum the Chief Whips of municipalities aired the challenges they face at the areas of deployment. They further applauded the convening of this forum. As the organisation has declared Mondays and Fridays as ANC & constituency days

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the Whippery is encouraging that members utilise Fridays to link with public representatives at local level in their constituencies.

Media and Communication Caucus resolved that the media and communications work must be driven from the Office of the Chief Whip on behalf of the Caucus. In this regard the Office of the Chief Whip has begun to innovate and is consolidating its media strategy.

Effectiveness of rules With planted and planned chaos as evident in National Parliament and other Legislatures, in the Eastern Cape Legislature not out of fortune but a deliberate endeavour of the Legislature to develop rules, policies and regulation which maintain order and decorum of the Legislature long before the mellow drama is even conceptualized. We are initiating a process to work with local council in strengthening their council rules.

Oversight: Portfolio Committee work & study groups

Oversight: Amongst the resolutions taken at the caucus is that the ANC must ensure that there is a correlation between Departmental and Provincial policy priorities, and adherence to ANC policies. Government Departments must be more accountable in terms of their programmes which seek to implement NDP priorities.

Constitutional Provision of Oversight In the South African context, oversight is a constitutionally mandated function of legislative organs of state to scrutinise and oversee executive action and any organ of state. It follows that oversight entails the informal and formal, watchful, strategic and structured scrutiny exercised by legislatures in respect of the implementation of laws, the application of the budget, and the strict observance of statutes and the Constitution. In addition, and most importantly, it entails overseeing the effective management of government departments by individual members of Cabinet in pursuit of improved service delivery for the achievement of a better quality of life for all citizens.

The ANC Caucus in the Legislature has a prime purpose of enhancing overall effectiveness over the Legislative, Oversight and Public Participation roles of the Institution. Portfolio Committees and ANC Study Group meeting are two primary mechanisms which are used to ensure that ANC Policies and programmes are translated into service delivery efforts that are aimed at improving the lives of the People of the Province. The ANC 53rd National Conference resolved to transform Legislatures and placing the ANC Caucus as the centre of decision making and accountability. This report then provides an assessment of the functioning of study groups and portfolio committees of the ANC Caucus in the Legislature for 2015/16 financial year.

The report reflects on oversight, public participation and law-making responsibilities and serves as a base of assessing progress made and challenges. In doing so it outlines the attendance, nature discussions and effectiveness of study groups and committees.

Study Groups They do convene for dealing with matters affecting their respective committees albeit uneven in their convening and noting resolution of the ANC Caucus Makgotlas to regularize study group meetings, coordination, streamlining and regularizing on convening committee study committee is still Whippery is

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working on improving. The resolutions of the Makgotlas specified that study groups should be regularized in order for ANC Members to meet and discuss issues before the broader meetings of committees.

On the other hand, these meetings provide an opportunity for the MECs to brief ANC Members on matters of importance. There are committees that honour study groups wherein consideration is given to MECs briefing and an analysis of the ANC Researcher.

Committees As far as committees are concerned the current scheduling of meetings per cluster has assisted in terms of organization and focus of study groups. Oversight over government departments takes place over a three week cycle and only one cluster is considered per week. In terms of the reports Members of the Executive lead Departmental delegation and they present an overview of the Department on any matter under consideration, followed by the Head of Department. The slots allocated for meetings are also adequate.

Over and above departmental presentations, portfolio committees do entertain matters from concerned groups that have issues with the departments. The department would be called in to account in a portfolio committee. Attendance in portfolio committees is much-admired and in cases of apologies they are approved by the Office of the Chief-Whip.

Departmental quarterly reports are being carried out as required by Sector Oversight Model. SOM has been implemented in stages. PFMA has been replaced with Financial Management for Parliament and Legislatures Act to regulate Legislature financial matters and regulations which are currently mooted by National Assembly may have serious implications for ANC Caucus financial management and transfers that are made to political parties

Public Participation With regards to public participation and accountability forums all the portfolio committees are allocated public participation slots in the programme of the Legislature and these slots are used to visit projects and for public participation programmes.

Attempts are made to ensure that these engagements are spread across the Province. One major public participation event that is coordinated by the Institution is Taking Legislature to the People which is rotated in the regions and there is maximum participation of all stakeholders.

The reports also indicate that repetitive findings are being experienced continuously, it is a concern that House resolutions are not in their entirely implemented by the departments, which then compromise oversighting. This further requires examination going forward in that what are to be the implications or non-thereof in enforcing recommendations of Auditor General as a Chapter 9 and 10 institutions. The recent findings by Constitutional court has bearing on how Parliaments and Legislatures views and conduct oversight going forward.

Oral and Written Questions On questions at the Chamber the response time for departments has been increased from ten days with additional five days.

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Staff Complement

Number Description Comment 1 Head of Caucus Support Services 2 Managers 7 Researchers 2 vacancies 1 PA 29 Secretaries 3 HR Practitioners (1 at Calata) 49 PCO Administrators 1 vacancy at Joubertina 49 Cleaners 1 vacancy at Port St Johns 1 Bookkeeper 1 Financial Administrator 1 Assistant Financial Administrator

Caucus has currently 49 Parliamentary Constituency Offices belonging to province. PCOs. It is important to note the geographic spread of the offices for deployment.

The offices are spread as follows:

No. Area Deployment 5 Buffalo City Dimbaza, Bhisho, King William’s Town, East London (regional office) & Mdantsane 8 Amathole Stutterheim (regional office), Alice, Seymour, Great Kei (Mooiplaas), Centane, Ngqamakwe, Willowvale & Xhorha (Elliotdale 5 Joe Gqabi Barkley East (regional office), Sterkspruit, Mt Fletcher, Maclear & Steynsburg 12 Chris Hani Queenstown (Regional), Lukhanji (satellite), Whittlesea, Molteno, Engcobo, Cala, Elliot (satellite), Middleburg, Cradock, Tsomo, Cofimvaba, Ntabethemba 8 Sarah Baartman Stormsriver, Joubertina (satellite), Klipplaat, Somerset East, Pearston (satellite), Graaf Reinet, Alicedale & Port Alfred 4 Alfred Nzo Mt Ayliff (regional), Mt Frere, Ntabankulu & Mbizana 5 Nelson Mandela Govan Mbeki (regional office), Motherwell, Uitenhage, Kwazakhele- Zwide-New Brighton (KZN), Stepping Stone. 3 OR Tambo Tsolo, Lusikisiki, Port St Johns.

Tools of trade and Office Furniture

All tools of trade in the offices of the MPLs in the ECP Legislature are supplied by the legislature. This includes to Desktops, Printers, Fax, Air conditioners, internet connection and telephone. Office furniture to the offices of the MPLs in the ECP Legislature is also supplied by the legislature.

The offices of the Head of Caucus, HR manager and PCOs are supplied furniture and tools of trade by the ANC Caucus. Telephone bills, municipal services and office rental in the PCOs is paid by the ANC.

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Resignations, Vacancies, Appointments and Advertisements

The 2015/16 term saw withdrawals of Mr Petrus Vantyu – Head of Caucus; Mr Brenton Jonas - Research Unit; Mr Nkwahla Bonginkosi – PCO Administrator at Port St Johns; Mr Monti Nicholas – PCO Administrator at Stutterheim; Ms Ceba Ntombizodwa – PCO Administrator at Mdantsane; Ms Makwayiba Gcobisa – Secretary to MPLs; Mr Rubuluza Lusanda – Secretary to MPLs; Mrs Meyer Venecia – Secretary to MPLs and the late Ms Dlamini Nothukela who passed on in June 2015.

The position of three Professional Training and Research was advertised for and it saw two researchers appointed in June 2015. The same goes for Secretaries to MPLs: two positions were advertised for and filled in August 2015. Three positions of secretaries were advertised for and filled in March 2016.

The positions of Administrators at Port St Johns, Stutterheim, Whittlesea and Mdantsane were all filled from October 2015 to March 2016.

The position of the Head of Caucus was advertised for in June 2015 but an appointment was made in May 2016.

The caucus has vacancies for

 Two Researchers;  One PCO Administrator at Joubertina;  Two Cleaners at Port St Johns and Queenstown.

Research Coordinator The ANC Research Unit does not have a manager and as such, the Whippery took a decision and nominated Mrs Bukiwe Ncipha-Wali, also a Researcher, as a Coordinator.

Training and Development ANC Caucus Support staff was taken to an Employee Relations workshop in October 2015 where the main focus was on the core business of the MPLs and the manner in which staff should relate to their principals.

The ECP Legislature has provided training and developing all caucus staff members in the legislature. A workshop on Office Etiquette was offered on the 18th April 2016 in Port Alfred.

More administration bound workshops will be offered, as per agreement between the Chief Whip’s office and the legislature.

Staff of the ANC in the legislature benefits from the legislature Bursary Scheme. PCO staff benefits from the ANC in terms of applying for bursary.

Sick Staff Mr Hoyo, secretary to the Office of the Deputy Chief Whip, had been hospitalised from October 2015 and discharged in December 2015. He is still recuperating at home and is not fit to come to work as yet. The Wellness Unit of the Legislature always takes him to check up visits in East London.

A PCO Administrator at Great Kei had both his legs amputated and is in no state to continue under employment. The unit had approached Old Mutual Provident Fund and the employee concerned regarding withdrawal from employment. That process will be finalised as soon as the Fund is up to date.

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Restructuring

The Caucus had halted its organizational review process, in anticipation of the Legislature organizational review process as Legislature process needed to finalize as what would constitute the core staff of the Office of the Chief Whip on his capacity as the Chief Whip of the Legislature.

In addition to find clarity that if constituency offices are extension offices of Legislature as they should then what kind of support in terms of personnel, rental, furniture or tools of trade. Once the aforesaid process is completed then the Office of the Chief Whip would restart the process of Caucus organizational review.

FINANCIAL REPORTING SECTION This chapter of the report will analyse the expenditure patterns for 2015/2016 financial year, the budget allocated to both Caucus and Constituency Funds for 2014 - 2017 financial years by Eastern Cape Provincial Legislature and PCO Detachment payment process. Explanation of material variances of expenditure

Table 1: Expenditure Patterns for 2015/2016 financial year

Description 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total Expenditure Constituency Fund 8,506,183.17 7,069,012.99 16,751,682.93 8,565,864.26 40,892,743.35 Caucus Fund 2,240,129.47 4,914,437.94 3,291,057.74 2,797,940.48 13,243,565.63 Total Expenditure 10,746,312.64 11,983,450.93 20,042,740.67 11,363,804.74 54,136,308.98

As indicated in the third quarter, the high expenditure of R20m is mainly due to:

. An amount of R5m that was incorrectly transferred by ECPL to Constituency Allowance instead of Political Party account i.e. Calata Account . The purchase of computers for all PCOs amounting to R718, 781.00. . Take off of the monthly programmes/themes whereby each member was allocated an amount of R15, 000.00 per month. . Payment of PCO Detachments with effect from December 2015 to date. . The rollover of the adjusted budget for 2014/15 assisted the Caucus to sustain the state of finances during 2015/16 financial year; otherwise the situation could have been dire.

Table 2: Overview of Budget Allocation for the 3 Year period

Description 2014/15 2015/16 2016/17 Total Budget Constituency Fund 40,231,419.08 33,444,218.00 35,294,104.00 108,969,741.08 Caucus Fund 12,640,603.78 10,834,114.00 11,433,382.00 34,908,099.78 Total Budget 52,872,022.86 44,278,332.00 46,727,486.00 143,877,840.86

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Budget

The annual budget for Caucus and Constituency allowances were prepared in line with the Medium Term Expenditure Framework. This is the monetary values of services, capital and consumption goods, and human capital determined from a Zero budget base.

All other items of controllable expenditure were funded from what remains after payroll and other contractual commitments (i.e. Office rentals and Office equipment) have been considered.

The Eastern Cape Provincial Legislature made transfer payments to a sum of R35, 575,668.14 to Constituency allowance and R12, 640,603.78 to Caucus allowance during the period 01 April 2014 to 31 March 2015.

Circular No. 1 of 2015:

The circular encompasses the guidelines to be followed by all the MPLs when requesting the payment of R15, 000.00 in respect of ANC monthly programs or themes.

This circular was distributed to all the offices of the members for their urgent attention as we have savings for the month of April and May 2015.

Circular No.2 of 2015: Office Refreshments/Cleaning Material

All requests for office refreshments/cleaning material were procured in accordance with circular 2 of 2015. The circular was distributed to all Administrators for standardization.

The Parliamentary Constituency Offices complied in terms of the circular resulting to an expenditure of R46, 800.00 for the period 01 April to 31 December 2015.

Finance and Reporting

The Annual Financial Statements (AFS) are prepared in accordance with the standards of generally recognized accounting practice (GRAP) as stipulated in Chapter 8, Section 55 (1) of the Financial Management of the Eastern Cape Provincial Legislature Act, 2009.

Constituency and Caucus general ledger was constructed in order to set up a bank manager and project tracker modules for planning and reporting purposes. Two staff members from finance unit attended training on Pastel Bank Manager and Project Tracker in March 2015.

Adjustment Budget for 2015/2016 Financial Year

The Caucus made submissions to the EC Provincial Legislature for an amount of

R10, 800,000.00 for the year under review. The amount is comprised of R6, 8 million for an under allocation of budget for 2015/2016 financial year plus R4 million for election programmes.

However, no explanation has been provided by Provincial Legislature for non-allocation of funds that were requested.

Pool Vehicle

ANC Caucus received quotations for procuring the second pool vehicle (i.e. Vito V200 CDI 7Seater). The vehicle could not be purchased due to insufficient funds.

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2016/17 Budget breakdown

It is imperative to highlight the following for consideration:

. As per Table 2 above, the budget for Constituency allowance has decreased from R40, 2 m to R33, 4 m and the Caucus budget also decreased from R12, 6m to R10, 8m during 2015/16 financial year. This illustrates that the indicative budget for 2015/16 was not informed by the adjusted budget in 2014/15 financial year. . As reflected in Table 1 above, it is evident that there is gross under allocation of budget for both 2015/16 and 2016/17 financial years as the total expenditure for 2015/16 discloses an amount of R54, 1m. . An adjustment of budget was requested to ECPL on the 12 October 2015; however, no response has been received by the Office of the Chief Whip. . The budget does not take into consideration the main cost drivers which are the Compensation of Employees and the office rentals i.e. . Rentals of office accommodation for the parliamentary constituency offices that are escalating on yearly basis. . Annual salary increase as per the approved Bargaining Council for the Improvement to Condition of Service (ICS). . Payment of PMDS/Notch progression/Grading.

Currently, the budget allocated for 2016/17 financial year caters only for the personnel cost to an amount of R32, 1m.

The estimated cost for the operational budget in line with budgeting framework for the Caucus Allowance for 2016/17 is R18, 1m as against an allocated budget of R11, 4m. This indicates that our financial sustainability is not viable.

PCO Detachments

The process of appointing PCO Detachments was underway with effect from October 2015 to prepare for the election programme to take place on the 03 August 2016. This process was delayed due to non-submission of ANC Detachment lists and signed contracts. In other instances wrong information was submitted.

Subsequent to the submission of the correct information, PCO Detachment database was formulated in Standard Bank Business Online in December 2015. Due to challenges faced by Finance Unit, Circular 1 & 3 of 2016 was issued as a guideline on the framework for the PCO Detachment’s report to alleviate these challenges for audit purposes. However, there are still difficulties in submitting the right information and a lot of replacing detachments on a monthly basis.

The PCO Detachments were not paid during the month of January 2016 due to non-submission of monthly reports and attendance registers. The attendance registers submitted were incomplete resulting to difficulties in reconciling the PCO Detachment lists that were paid in December 2015.

PCO Detachments have been forwarded a template for reporting however most of them do not adhere to the proposed reporting. It has been identified that they only submit attendance registers which are used for their payments. Albeit the fact that feedback from ANC structures is that Detachments are doing good work.

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Equipment

Aloe/Xerox has finalized the formatting of the 43 old computers at no financial costs and the delivery plan has been developed to ensure that all computers are distributed to the respective PCO’s.

Audit for 2015/16 financial year

The audit process for the year under review is scheduled by PKF auditors to take place from the 20th June 2016.

RESEARCH SECTION COMPOSITION

Currently the unit has 7 Researchers as Mr Brenton Jonas resigned due to a permanent appointment at the Department of Safety and Liaison and two positions are vacant. Ms Bukiwe Ncipha remains being a coordinator

Summary of activities undertaken in 2015/16

Strategic Objective: Provide evidence-based research services to support the ANC Caucus Priority Key activities / tasks Time frames Progress Capacitating Recruitment of 2 June 2015 Researchers attached to Education, Transport, of Research Researchers Economic Development and OTP Portfolio Unit Committees Acquisition of work tools August 2015 8 laptops, 8 3g cards and 5 new cell phones were and software applications procured. 3 cell phones were upgraded. Need portable printers and dictaphone. Identify research specific Ongoing 3 Researchers attended Monitoring and Evaluation training needs for the unit capacity building. Need capacity building on Finance for Non-Financial Managers, SPSS, Monitoring and Evaluation, Political Speechwriting Executive Conceptualise new research June 2015 Developed concept document for the Research Unit. Research themes and processes Conducted Pre Local Government Elections survey in Projects July – August Nelson Mandela Metro Municipality. 2015 Developed training manual for Constituency Management Committees. Developed module on roles of Whippery in September Municipalities. 2015 Profiling of the late Tata Bongco, Dubu Location in October 2015 Fort Beaufort. Identify, plan and manage Ongoing Study Groups, PC sittings and Constituency visits. information gathering and investigation projects to enhance the work of the ANC Caucus Develop a mechanism of Ongoing Analysis of IEC results, scan media and research prioritising areas that focus reports. on the provision of the ANC Manifesto Initiate inter-linkages with Ongoing Link with National Office and KZN Caucus. other ANC Caucuses for best practice and standards Establish and maintain Ongoing ECSECC networks with other research houses Provincial ANC M&E unit

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Strategic Objective: Provide evidence-based research services to support the ANC Caucus Priority Key activities / tasks Time frames Progress Scan media reports on Ongoing Information gathered and used to craft debate in socio-economic and Study Groups and speeches. political trends, service delivery challenges and innovations Generate reports for the Ongoing Legkotla reports Caucus and other ANC Caucus reports structures Whippery reports Study Group Reports ANC sub-committee reports Detachment reports Presentation of report October 2015 Presentation of findings of Nelson Mandela Metro findings to Caucus for Pre-Elections survey. operationalisation Primary and Analysis of Departmental Ongoing Study groups, Portfolio Committees and House secondary reports, media and Sittings research to research houses (Budget support Votes, financial oversight oversight and Annual Reports) taking into consideration of ANC priorities Presentation of analysis to April – May study Groups and Portfolio 2015 Committee meetings Conduct field work/service July – August Preparations for Taking Legislature to the People delivery survey 2015 Generate reports on September – Consolidation of urgent cases for Office of the Chief findings for action by Office November Whip of the Chief Whip 2015 Consolidation of petitions following TLTP. Advance Compile speeches for April – May Prepared Speeches for MPLs ANC Policy Budget Vote debates 2015 and positions on House Sitting – Budget Vote May – June given Debates 2015 matters Challenges and Recommendations:  The unit does not have an operational budget and as such cannot effectively carry out its planned programmes.  The Legislature should consider providing the budget in line with the rules committee decision to provide research support to Political Parties.

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2. Report of the DEMOCRATIC ALLIANCE

The core focus of the work of the Democratic Alliance in the legislature remained oversight and accountability of provincial government departments during the year under review. The 14 departments and parastatals were scrutinised by means of portfolio committee meetings, oversight visits and legislature debates where the DA made positive contributions and promoted our alternative, solution-driven policies. Oral- and written parliamentary questions to members of the executive further contributed to our role in ensuring that accountability is upheld.

Our profile of public participation in the affairs of the legislature remained high. MPLs and support staff continued to receive and deal with enquiries for information from various institutions and by resolving ever- increasing numbers of queries from the general public. On 23 September 2015, we welcomed Hon. Sanele Magaqa as a member of the legislature. A vacancy had arisen after the resignation of Hon. Nokonwaba Matikinca from the legislature. The caucus continued under the leadership of Hon. Athol Trollip with Hon. Bobby Stevenson as chief whip, Hon. Ross Purdon as caucus chairperson and Hon. Veliswa Mvenya and Hon. Edmund van Vuuren as whips.

Portfolios were allocated as follows: Hon. Athol Trollip: Rural Development and Agrarian Reform Hon. Bobby Stevenson: Finance, Safety and Security Hon. Veliswa Mvenya: Cooperative Governance and Traditional Affairs Hon. Edmund van Vuuren: Education Hon. Ross Purdon: Economic Development, Environmental Affairs and Tourism, Sport, Recreation, Arts and Culture Hon. Marshall von Buchenroder: Transport Hon. Sanele Magaqa: Human Settlements Hon. Vicky Knoetze: Roads and Public Works Hon. Kobus Botha: Social Development Hon. Celeste Barker: Health

During May 2015 the DA offices were moved from Block 1 North in the legislature building to Block 1 South. Our electronic- and social media platforms continued to enhance the electorate’s access to the provincial legislature through our MPLs. We continued to grow our website, www.dabhisho.org.za together with Twitter on @DAEasternCape and our Facebook-page. These mechanisms play an important role in publicising the affairs of the legislature. Our staff of nine continued with their support role of the MPLs. We said farewell to Ms Leanne Adams, Assistant to the Chief Whip and welcomed Ms Anathi Majeke to the team. The DA MPLs were allocated the following constituencies in order to bring the concerns of the public to the attention of the Legislature:

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Hon. Bobby Stevenson: PE South-West (NMBM Ward 1,2, 3, 4 ,5, 6, 7, 8, 9, 11, 40) Hon. Veliswa Mvenya: Phesheya Kwenciba (Mnquma, Nyandeni, KSD, Mhlonhlo, Port St Johns, Mbashe) Hon. Edmund van Vuuren: PE Northern Areas (NMBM wards 10, 11, 12, 13, 29, 31, 33, 34, 35, 36, 37, 38, 39) Hon. Ross Purdon: Ntsikana (Ngqushwa, Nxuba, Nkonkobe) Hon. Marshall von Buchenroder: Winterhoek (Uitenhage, Despatch, Colchester, KwaNobuhle) Hon. Sanele Magaqa: Alfred Nzo (Umzimvubu, Matatiele, Mbizana, Flagstaff, Lusikisiki) Hon. Vicky Knoetze: Zuurberg (Sunday’s River Valley, Blue Crane Route) Hon. Kobus Botha: EC Midlands (Inxuba Yethemba, Tsolwana, Inkwanca) Hon. Celeste Barker: Chris Hani (Lukhanji, Engcobo, Emalahleni, Intsika Yethu, Sakhisizwe)

Our constituency offices remained an important link with the public. MPLs’ outreach activities within the constituencies facilitated direct interaction with the electorate through report back meetings and issue-based meetings in constituencies. DA constituency offices are operated in the Nelson Mandela Bay Metro and KwaZakhele, Buffalo City, Butterworth, Queenstown, Middelburg, Humansdorp, Willowmore, Kirkwood, Graaff-Reinet, Cradock, Stutterheim and Aliwal-North. Regular activities included voter education and registration queries, information tables, press conferences, a bulk short message system and road shows.

The caucus asked frequent and many questions for oral- and written reply. A total of 40 Internal Question Papers for written reply were issued and five papers for oral reply in the House. These questions exposed issues ranging from corruption, maladministration, ensuring payment of pensions, salaries and suppliers, as well as queries about hospitals, schools, clinics and policing. Questions are an important tool in resolving queries. Without the questioning procedure which is available to public representatives, our democracy would be hindered. The breakdown below bears testimony to our commitment:

PARTY WRITTEN QUESTIONS ORAL QUESTIONS African National Congress 2 21 Congress of the People 0 4 Democratic Alliance 371 79 Economic Freedom Fighters 4 2 United Democratic Movement 18 2 Total: 395 108

In the year under review the following members of staff were employed by the party: Personal assistant to the Leader in the Legislature, Hon. A. Trollip: Ms Amanda van Wyk

Secretary for the Whip, Hon. B. Stevenson: Ms Leanne Adams/Ms Anathi Majeke

Secretary for the Caucus Chair, Hon. R. Purdon and Hon. E. van Vuuren: Ms Nalisha Dhaya

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Secretary for the Hon. V. Mvenya and Hon. S. Magaqa: Ms Linda Mputa

Secretary for the Hon. C. Barker and Hon. V. Knoetze: Ms Gerrie Willemse

Secretary for the Hon. K. Botha and Hon. M. von Buchenroder: Ms Tessa Botha

Research and communication: Ms Cecile Greyling

Research and communication: Ms Phindi Sogoni

Research: Ms Marissa Thring We proudly accept the support and trust that the electorate has placed in us, as public representatives. We are determined to continue to serve the electorate by defending democracy and holding the executive to account in the Eastern Cape Provincial Legislature.

Hon. Athol Trollip Caucus Leader

166 3. Report of the UNITED DEMOCRATIC MOVEMENT

The UDM has received three sources of funding from the Eastern Cape Legislature, the first thereof being the Constituency Allowance fund which amounted R3 039 348,00. The funds have been utilized in renting offices of the Party in Mthatha, Butterworth, Elliotdale, Lusikisiki, Queenstown, Cofimvaba, Mt Aylifff, East London and Port Elizabeth. The salaries of the staff who are manning these offices have been met out of these funds. Besides the issue of attending to members of communities who come to the offices, they also assist people with their complaints affecting the offices of Home affairs for Identity Documents and SASSA offices for social grants.

The second funding is the Political Allowance of R2 242 381, 00 which is used by the UDM for the promotion of Multi-Party democracy through the arrangements of political rallies of the UDM in the various Regions of the Party and the printing of t-shirts and flyers for distribution to the voters. This funding is of great assistance to the Party as the structures of the Party are able to attend UDM Conferences in Bloemfontein through the financial assistance of hiring buses and taxis to transport members. Campaigns are arranged and addressed throughout the Eastern Cape and people are transported such as volunteers and Party Agents get food out of these funds during elections when they perform duties in the voting stations.

The third funding is the Caucus Fund of R1 227 478, 00 which is used solely for travelling and subsistence of the UDM Members of the Legislature and Support Staff. Training for the Support Staff and purchase of the tools of trade met out of this fund. The members are able to be available in all areas where they are required for duty pertaining to all Party matters.

Masiza Maxwell Mhlati Provincial Leader

167 4. Report of the CONGRESS PEOPLE

The Congress of the People’s focus was mainly based on engaging with the communities through, Public meetings and Constituency visits in order to solicit the communities problems in terms of service delivery and other problems the communities might have with the government.

Hon Sharpley as a link between the people and the Legislature visited the Chiefs of Willowvale on a constituency visit, the community of Qoboqobo in Centane, Public meetings in were held in Phakamisa , Mdantsane, Cookhouse, Phathilizwe in Willowvale amongst the schools, and Hospitals that Hon Sharpley visited on his own as a portfolio committee member in the Legislature .

COPE Constituency Satellite office situated in 18 Market Street Grahamstown had one staff member which was closed early 2016. Constituency office in East London was previously situated in 136 Oxford Street, of which towards the end of 2015 we moved into a bigger office in 278 Oxford Street. The new office is fully furnished and has three staff members. The office educates the Public about the roles of the Legislature, assists with problems the people might have regarding service delivery, the queries are then forwarded to the office in the Legislature and brought forward in the form of Written Questions and Oral questions as well as letters sent to the relevant departments.

Staff members:

 Secretary for COPE MPL in the Legislature  Researcher Three staff members for COPE Constituency Office

 Office Manager  Office assistant  General Assistant We were able to arrange venues, catering and transport for meetings, with these meetings we were able to educate the public about the role COPE plays as an opposition party in the Legislature, as well as finding out matters that affect the communities. We received numerous complaints regarding lack of service delivery, of which through our office in the Legislature were able to forward the problems to the relevant departments. We were able to educate and encourage the public about voter registration for 2016 local government elections. Through mediums such as visual advertising billboards in King Williams Town Alexander Road, East London Oxford Street and in Mthatha. As well as Posters were put up in the following regions to encourage the public to register to vote;

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 Chris Hani  Buffalo City  Amathole  Cacadu  Nelson Mandela Metro  O.R Tambo. For the Caucus fund assisted with the travelling expenses of COPE caucuses.

Hon L K Sharpley (MPL) COPE Leader

169 5. Report of the AFRICAN INDEPENDENT CONGRESS

OFFICE OF THE HON.V KRAKRI The past twelve months have been very busy and fruitful for the AIC as it has been preparing to contest the 2016 Local Government Elections almost in all nine provinces in the country. The preparation added to the growth on the organizations and strengthened the areas where it already existed. This has been proved by the increase in the number of our membership and the interest people of South Africa had shown to this party. This organization has successfully implemented its programme aimed at educating the citizens of the country about democracy and how South Africans are expected to participate in such democracy apart from just voting.

The following were some of the issues that the public was made aware of:  Principles of democracy  Public participation  How the two houses of Parliament work  Functions of the Portfolio Committees  Making public representatives account to the public  Signing of petitions  The role of constituency offices

This organization is more committed into putting the people to take a centre stage in governance. In so doing, it has tried its best to have satellite offices closer to the people and its members where possible. As the AIC is having the representatives in the National Assembly, It opened three constituency offices in three different provinces .i.e. Durban in KZN, Johannesburg in Gauteng and Matatiele in the Eastern Cape. We also have one provincial constituency office in Port Elizabeth in the Eastern Cape which is accompanied by two provincial satellite offices in Bizana and Mount Fletcher, all under Hon.Krakri who is a member of the Provincial Legislature. As a result of the financial support we received from the Eastern Cape Provincial Legislature and the National Assembly, this organization has increased its staff from sixteen to thirty staff members. We could not have managed to create such job opportunities without the funding from the province. I am glad to report that the office of the Hon. Krakri remains in the same place as reported in the previous report. However, we are still lacking in as far as the issue of essential skills like; researchers and bookkeepers are concerned. It is why this organization would be glad if the grant given to political parties represented in the legislature can be increased. We thank you for the support you continue giving all parties represented in the legislature. We hope that this will continue for years to come.

S.M JAFTA SECRETARY GENERAL

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