Department of Human Settlements Free State Province

DEPARTMENT OF HUMAN SETTLEMENTS FREE STATE PROVINCE

VOTE NO. 13

ANNUAL REPORT 2014/2015 FINANCIAL YEAR

PR311/2015

ISBN 978-0-621-44021-8

CONTENT PAGE No PART A: GENERAL INFORMATION ...... 4 1. DEPARTMENT GENERAL INFORMATION ...... 5 2. LIST OF ABBREVIATIONS/ACRONYMS ...... 6 3. FOREWORD BY THE MEC ...... 7 4. REPORT OF THE ACCOUNTING OFFICER ...... 9 5. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT ...... 17 6. STRATEGIC OVERVIEW ...... 18 6.1. Vision ...... 18 6.2. Mission ...... 18 6.3. Values ...... 18 7. LEGISLATIVE AND OTHER MANDATES ...... 19 8. ORGANISATIONAL STRUCTURE ...... 26

PART B: PERFORMANCE INFORMATION ...... 27 AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES ...... 28 2. OVERVIEW OF DEPARTMENTAL PERFORMANCE ...... 29 2.1. Service Delivery Environment ...... 29 2.2. Service Delivery Improvement Plan ...... 30 2.3. Organisational environment ...... 31 2.4. Key policy developments and legislative changes ...... 32 3. STRATEGIC OUTCOME ORIENTED GOALS ...... 32 4. PERFORMANCE INFORMATION BY PROGRAMME ...... 32 4.1. Programme 1: ...... 32 4.2. Programme 2: ...... 45 4.3. Programme 3: ...... 46 4.4. Programme 4: ...... 53 5. TRANSFER PAYMENTS...... 55 5.1. Transfer payments to public entities ...... 55 5.2. Transfer payments to all organisations other than public entities ...... 55 6. CONDITIONAL GRANTS ...... 55 6.1. Conditional grants and earmarked funds paid ...... 55 6.2. Conditional grants and earmarked funds received ...... 56 7. DONOR FUNDS ...... 57 7.1. Donor Funds Received ...... 57 8. CAPITAL INVESTMENT...... 57 8.1. Capital investment, maintenance and asset management plan ...... 57

PART C: GOVERNANCE ...... 58 1. INTRODUCTION ...... 59 2. RISK MANAGEMENT ...... 59 3. FRAUD AND CORRUPTION ...... 59 4. MINIMISING CONFLICT OF INTEREST ...... 60 5. CODE OF CONDUCT ...... 60 6. HEALTH SAFETY AND ENVIRONMENTAL ISSUES ...... 60 7. PORTFOLIO COMMITTEES ...... 61 8. PROPAC RESOLUTIONS ...... 61 9. PRIOR MODIFICATIONS TO AUDIT REPORTS ...... 63 10. INTERNAL CONTROL UNIT ...... 63 11. INTERNAL AUDIT AND AUDIT COMMITTEES ...... 63 12. AUDIT COMMITTEE REPORT ...... 65

PART D: HUMAN RESOURCE MANAGEMENT ...... 72 1. INTRODUCTION ...... 73 2. OVERVIEW OF HUMAN RESOURCES ...... 73 3. HUMAN RESOURCES OVERSIGHT STATISTICS ...... 75

PART E: FINANCIAL INFORMATION...... 116 1. REPORT OF THE AUDITOR GENERAL ...... 117 2. ANNUAL FINANCIAL STATEMENTS...... 128

PART A: GENERAL INFORMATION

1. DEPARTMENT GENERAL INFORMATION

PHYSICAL ADDRESS: 7th Floor, OR Tambo House

Cnr. Markgraaff and St Andrews streets

Bloemfontein

9301

POSTAL ADDRESS: P O Box 211

Bloemfontein

9300

TELEPHONE NUMBER/S: 051 403 5391

FAX NUMBER: 051 403 3699

E-Mail Address Head of Department: [email protected] Chief Financial Officer: [email protected]/[email protected] Chief Director: Corporate Services: [email protected]

Website Address www.freestateonline.fs.gov.za http://www.humansettlements.fs.gov.za

2. LIST OF ABBREVIATIONS/ACRONYMS

AG Auditor-General

AGSA Auditor General of South Africa

AO Accounting Officer

BNG Breaking New Ground

CRU Community Rental Units

DPSA Department of Public Service and Administration

FLISP Financed Linked Individual Subsidy Programme

FSGDS Free State Growth and Development Strategy

GSRB Gender Sensitive Rights Based

HOD Head of Department

HDA Housing Development Agency

HSDG Human Settlements Development Grant

ICT Information Communication Technology

IDP Integrated Development Plan

IGR Inter-Governmental Relations

KPI Key Performance Indicator

M&E Monitoring and Evaluation

MEC Member of Executive Council

MPAT Management Performance Assessment Tool

MTEF Medium Term Expenditure Framework

NDP National Development Plan

NHBRC National Home Builders Registration Council

NUSP National Upgrading Support Programme

3. FOREWORD BY THE EXECUTIVE AUTHORITY

One of the basic elements of a stable and progressive society is steady homes and communities, which in return nurture well-adjusted and productive people who contribute to the wellbeing and progression of their society. These ideal homes, in a democratic society, are established in human settlements that conform to basic human rights. The standard that was set by the Freedom Charter that “all people shall have the right to live where they choose, be decently housed, and bring up their families in comfort and security” is relevant in this context.

The cornerstone of our responsibility is to provide integrated and sustainable human settlements in the province, towards ensuring a better life for all as stipulated in Outcome 8: Sustainable human settlements and improved quality of household life.

We have in the past 20 years evolved in our provision of human settlements; from providing housing as a unit to building human settlements that include infrastructure and basic services. Working in an integrated manner together with other government sectors, we included other amenities that make up complete human settlements with clinics, schools, roads, multi- purpose MEC SM MLAMLELI community halls etc. Our houses have also changed from smaller units to the current 50m² as a standard basic size with various designs that express individuality. In our quest to provide our people with homes, we have also acquired land for human settlement in which our people have been decently housed and many settlements today bear a testimony that we have not diverged from our vision and have indeed restored the dignity of many of our people who today live in their own homes with pride.

The Free State government remains committed to the provision of decent shelter and settlements wherein people have access to clean water and proper sanitation. As a collective, we remain committed to accelerating the delivery of housing as a key strategy for poverty alleviation and utilizing the provision of housing as one of the major job creation strategies and economic development. We have also successfully used human settlements development to address other socio economic and sustainability issues such as skills development, economic development, women and youth empowerment as well as overall redressing of the imbalances of the past.

Despite numerous challenges, the department continued to work steadily on its quest to provide decent housing to deserving Free State citizens. To mention some of our successes:

 Low-income affordable housing units were constructed.

 Deeds of transfer were registered in favour of the qualifying beneficiaries.

 Erven were planned and surveyed for human settlements development purposes.

 Municipalities were supported for level 1 accreditation, while the Mangaung Metro was supported for level 3 accreditation.

 Households in newly formalized areas were provided with access to basic water and sanitation.

 Former mining hostels that served the migrant labour system and deprived our people of dignity, resulting in segregated families, were reconstructed into family units of up to three bedrooms.

 We have also successfully built Social Housing and Rental Units, as well as Community Residential Units that offer affordable alternative accommodation for low- income earners who would rather rent than buy houses or cannot afford to buy. These are well located within reach of places of employment, schools and hospitals and other services.

Our journey has been long and challenging, but with each year our vision, shaped by the needs of our people and the country‟s National Development Plan Vision 2030 for providing decent human settlements has grown sharper and more focused resulting in improved homes each time. Our people are happy and proud owners of decent homes, and we have indeed ensured that these live in comfort and security.

Our commitment: we will continue to work hard to improve our performance for the benefit of our people for together we can do more, and, together we move South Africa forward!

------

SM MLAMLELI (MPL)

MEC: COOPERATIVE GOVERNANCE, TRADITIONAL AFFAIRS AND HUMAN SETTLEMENTS

4. REPORT OF THE ACCOUNTING OFFICER

4.1 Overview of the operations of the department

The department as a champion for implementation of Outcome 8: Sustainable Human Settlements and Improved Quality of Household Life has made significant achievements in the 2014/2015 in respect of the three outcomes namely:

1. Accelerated delivery of housing opportunities 2. Improved access to sanitation in newly-formalised areas 3. Mobilisation of well-located public land for low-income and affordable housing

Below are milestones achieved in each of the outcomes despite the many challenges facing the department during the year under review.

 There were 14 212 houses enrolled with NHBRC (424 Community Residential Units and 284 Social Housing)  1154 Deeds of transfer were registered in favour of qualifying beneficiaries:  8 parcels of land were identified and transferred to municipalities for development purposes o 5615 erven planned and surveyed  1.9 Km of roads constructed in newly-formalized areas o 6 municipalities supported towards accreditation  In the current financial year, 5 313 new housing units (including social and rental housing) were completed in the province across all housing HOD N MOKHESI programmes  1920 new sites have been connected to basic water and sanitation services as part of the Integrated Residential Development Programme while  In addition, 3 774 households have been connected to basic services as part of the Informal Settlements Upgrading Programme.  In this financial year, the department created 1646 job opportunities through resettlement and housing construction projects.

The department developed the following MTEF targets for 2014-2017 as part of its strategic objectives in alignment with the three outcomes as stated.

 Alignment of human settlement plans  A multi-year housing development plan  Enrolment of housing projects with the National Home Builders Registration Council (NHBRC)

Different types of housing designs

Different types of housing designs/models have been piloted in Thandanani, Welkom. This project will yield 1 424 houses. New designs have been implemented in Zastron and Thaba Phatswa.

Mining towns support programme: planning and survey projects

Planning and survey projects (Township establishment) in Matjhabeng Local Municipality for 6 700 sites which aim at addressing informal settlements upgrading in areas such as Nyakallong, Thabong, Bronville, Mmamahabane, Phomolong, and Kutlwanong.

The installation of basic services is practically completed at Thandanani Informal Settlement (Matjhabeng) and the construction of top structures has commenced.

Water and Sewer networks

Water and sewer networks will be implemented in Phahameng: Bultfontein, Wesselsbron, Refengkgotso, Themba Khubeka, Excelsior and in Caleb Motshabi as part of the big turnkey development. The total number of sites to be serviced in these projects is 11 511.

Free State informal settlements rapid assessments and categorisation

The Rapid Assessment and Categorization reports of 143 informal settlements in all 19 Free State local municipalities and 1 metro are completed.

Free State NUSP municipalities’ settlements enumerations

The enumeration of informal settlement in all 6 Free State NUSP municipalities has also been completed.

The overall objective of the enumerations is to encourage participatory planning process for production of settlement upgrading plans and to conduct detailed household enumerations (socio- economic surveys) in the informal settlements in order to establish the actual number of structures, the actual population, the community special needs and livelihoods, and to develop a programme based on accurate information. This would help ascertain the appropriate development intervention and settlement management needs in the development of appropriate upgrading plans for each settlement.

Mangaung Metro Informal Settlements Upgrading Strategy

The Mangaung Metro Informal Settlements Upgrading Strategy has been completed and the strategy is being implemented. This strategy is a developmental strategy which seeks to bring about more rapid, equitable and broad based responses to the challenge of informal settlements in the Metro

The Department is currently working with the Housing Development Agency to assist the Metro with a Resettlement plan and Enumerations of 9 settlements earmarked for relocation.

Acquisition of 3 Sasolburg properties

Acquisition of three Sasolburg properties situated in Metsimaholo Local Municipality consisting of approximately 252 4645ha in extent which could yield approximately 1900 mixed residential opportunities. Transfer of these properties to Metsimaholo Municipality is in process. The urban design on the subject properties has commenced and the development planning to commence thereafter. These properties are situated on prime land which could, if developed, link the Sasolburg

and the Vanderbijlpark Towns, and have been earmarked as the human settlements catalytic project of the Free State Province.

Acquisition of 49 Estoire properties

Acquisition of 49 Estoire properties situated in Mangaung Metro consisting of approximately 191. 9665 ha in extent which could yield approximately 3 500 mixed residential opportunities. Transfer of these properties to Mangaung Metro is in the final stage. The development planning is to commence upon transfer. These properties are ideally and strategically located along the N8 development corridor.

Prioritizing of youth and women empowerment

The Department has allocated 20% of its projects to women and youth thus ensuring women and youth empowerment. It is envisaged that the province will increase the percentage to achieve the 60% target set by National.

Key plans and upcoming programmes

 Caleb Motshabi, in Mangaung Metro is a mixed development project yielding 7 554 mixed housing units

 Alternative Building Technology has been piloted in Vrede and the project will yield 1 000 houses. To date 26 houses have been completed

 4358 Breaking New Ground (BNG) housing units have been planned for construction in the 2014-2015 financial year and to date 422 of these have been completed. The new house designs that are more energy efficient and aesthetically pleasing on BNG units will be constructed throughout the province.

 The department will also be entering into a new project to provide housing for military veterans.

Challenges

 Labour and community unrests at project sites resulting in project completion delays  Capacity constraints  Prolonged procurement processes  Difficulty in acquisition of sites for military veterans  Change in priorities where expenditure had to be fast tracked  Insufficient capacity  Slow construction progress due adverse weather  Failed mortgage approvals at the banks because of over indebtedness of prospective applicants

Financial Management

The Annual Appropriated Budget for the department during the year under review decreased by 17% compared to the previous year. This has been due to the overall decrease in the funds allocated under HSDG nationally. Furthermore the provincial allocation of equitable share has also seen shrinkage due to declining population on the province affecting departmental appropriated amounts.

The effect of the declining appropriations has put a lot of pressure on the department in discharging its mandate with fewer funds. This called for reprioritisation of projects.

Despite the budgetary constraints, the department has made an enormous impact on driving service delivery mandate in each of its current programmes.

The overall financial performance stood at 98.3% for 2014-2015 as compared to 99.8% of the previous year. The decline in budget utilisation is attributable to R14. 8 million that was received late in the financial year by the department for the Military Veterans project. This money has been

requested for roll over as the department will be commencing with the project in the 2015/2016 financial year. There was also an element of savings due to the implementation of the cost containment measures.

The department has prepared the Annual Financial Statements in accordance with the Modified Cash Standard as prescribed by National Treasury and the PFMA. The department has summarised the critical aspects on financial performance for the year ended 31 March 2015. The aim is to bring to the attention those matters that the department believes are critical in the assessment and reading of the department‟s Annual Financial Statements.

------N MOKHESI HEAD OF DEPARTMENT OF HUMAN SETTLEMENTS

24 August 2015

4.2 Overview of the financial results of the department

Departmental 2014/2015 2013/2014 receipts Estimate Actual (Over)/Under Estimate Actual (Over)/Under Amount Collection Amount Collection Departmental Collected Collected receipts R’000 R’000 R’000 R’000 R’000 R’000 Tax Receipts Sale of goods and services other than 96 425 (329) 60 284 (224) capital assets Interest, dividends and rent on land 8 7 1 10 14 (4) Financial transactions in assets and liabilities 768 724 44 150 357 (207) Total 872 1 156 (284) 220 655 (435)

The department does not generate revenue, however the revenue that it collects comprises of payment for tender documentation, the selling of redundant assets and the recovery of receivables.

The department does not have a tariff policy and it applies the standard Provincial Treasury tariffs as prescribed.

The department exceeded the collection requirements due to the vast interest by the public to participate in its tenders in the current financial year.

Programme Expenditure

The table below provides a summary of the actual expenditure in comparison to the adjusted appropriation for both the current year and previous year at programme level.

2014/2015 2013/2014 Programme Final Actual (Over)/ Under Final Actual (Over)/Under Name Appropriatio Expenditure Expenditure Appropriation Expenditure Expenditure n R’000 R’000 R’000 R’000 R’000 R’000 Administration 80 485 77 314 3 171 68 672 68 257 415 Housing needs, 18 553 17 607 946 13 194 12 829 365 research and planning Housing Development 1 128 216 1 111 861 16 355 1 401 294 1 400 500 794 Housing assets management 964 770 194 1 007 175 832 and property management Total 1 228 218 1 207 552 20 666 1 484 167 1 481 761 2 406

Programme 1: Administration

The programme recorded actual expenditure of R 77 314 million or 96.06 per cent in the 2014/15 financial year compared to 99.40 per cent in the previous financial year. The expenditure has depicts decrease of approximately 3.34 per cent in 2014/15 financial year. The late submission of invoices to the department by the suppliers is the main reason for under spending.

Programme 2: Housing Needs, Research & Planning

The programme spent R 17 606 or 94.90 per cent in the current financial year compared to 97.23 per cent in the 2013/14 financial year. The more spending on this programme is on compensation of employees as the programme spent 99 per cent on compensation.

Programme 3: Housing Development

The programme spent 98.60 per cent in the 2014/15 financial year which indicates a decrease of approximately 1.40 per cent compared to 99.90 per cent spent in the 2013/14 financial year. The decrease of expenditure is as results of special adjustment budget amounting to R 14 886 million that was received on January 2015.

Programme 4: Housing Assets Management & Property Management

The programme spent R 0.769 million or 79.90 per cent in the 2014/15 financial year compared to R 0.175 million or 17.38 per cent in the 2013/14 financial year. The expenditure has increased mainly on compensation on this programme.

Virements /roll overs

. For the current financial year the roll overs, the Department applied, however no formal feedback was received from Provincial Treasury. . The following reasons are applicable to virement:

Programme 1: Administration The programme identified savings on compensation amounting to R 2.103 million and R 0.922 million on goods and services; as a result the programme effected a virement amounting to R 3.021 million to the following programmes: 2, 3 and 4. Programme 1 also received R4 000 from Programme 2 to avoid over expenditure on current households.

Programme 2: Housing Needs, Research & Planning The programme received R 0.876 million to avoid the over expenditure on compensation of employees.

Programme 3: Housing Development The programme also received an amount of R 2.075 million to avoid excess expenditure on compensation, goods & services and current households.

Programme 4: Housing Assets Management & Property Management The programme received an amount of R 0.070 million to supplement the compensation budget as it was indicating over expenditure.

Unauthorised, fruitless and wasteful and irregular expenditure

The department did not incur any unauthorised expenditure for the financial year and managed to spend 98% of its budget.

Fruitless and wasteful expenditure to the amount of R 190 000 was identified in the financial year and this related to payments of overdue accounts that incurred interest. The Department is implementing processes to ensure payments take place with-in 30 days as per the requirements.

There has been irregular expenditure identified in the financial year to the amount of R 980 965 million. The majority of this was due to the incorrect processes being followed for the procurement and allocation of the housing grant. The department has applied to Provincial Treasury for condonation of the said amount, including previous year. The department has performed investigations and been able to write-off irregular expenditure to the amount of R 1637 940 million. o Systems in place to prevent irregular expenditure, fruitless and wasteful o expenditure - The contractors database has been established to ensure that housing contracts fully complies with due SCM processes - A register of all deviation from SCM processes is maintained - The register has been developed to ensure that all irregular expenditure are duly recorded and disclosed in the Annual Financial Statements - A checklist has been developed and maintained for each payment to identify and detect irregular expenditure. o Challenges experienced in SCM and how they were resolved - Due to high vacancy rate within the SCM unit key critical factors are not performed at optimal level and thereby compromising proper segregation of duties. The posts are funded in the 2015/2016 financial year to ensure that the unit is fully functional. o The Department did not conclude any unsolicited bid during the year under review

Public Private Partnerships

The department did not pursue any public private partnerships in the financial year under review.

Discontinued activities / activities to be discontinued

The department did not have any discontinued activities for the financial year under review.

New or proposed activities

The department does not have intentions for any new activities for the next financial year.

Supply Chain Management o The department did not conclude any unsolicited bid during the year under review. o The department has the following systems in place to prevent irregular and fruitless and wasteful expenditure:

- Contractors‟ database has been established to assist the department in complying with the prescripts. - A register of deviation from SCM processes has been developed and is maintained. - The register has been developed to ensure that all irregular expenditure are duly recorded and disclosed in the Annual Financial Statements. This register is monitored on a regular basis and investigations are performed to determine the underlying reasons and accountability. - A checklist has been developed and maintained for each payment to identify and detect irregular expenditure

Gifts and Donations received in kind from non-related parties

Received in cash: - E‟tsho Civils Govan Mbeki Awards R 150 000 - Ernst and Young Govan Mbeki Awards R 50 000 - Mafuri Infrastructure Africa Govan Mbeki Awards R 115 000 - Mafuri Turnkey Africa Govan Mbeki Awards R 150 000

Received in kind for Freedom day celebrations - E‟tsho Civils – Accommodation R 45 000 - Mafuri Infrastructure Africa – Transport and catering R 35 000

Exemptions and deviations received from the National Treasury

- The department did not apply or received any exemption from PFMA or TR or deviations from the financial reporting requirements for the current or previous financial years.

Events after the reporting date

- No significant events occurred after the reporting date.

Other

Related party relationships

The housing fund falls under the administration of the Department of Human Settlements and shares the same Accounting Officer. Once the fund ceases to operate, the bank balance will be surrendered to the department.

Acknowledgement and Appreciation

Approval and sign off

The Annual Financial Statements set out on pages 129 to 217 have been approved.

______N Mokhesi HoD: Human Settlements Date: 24 August 2015

5. STATEMENT OF RESPONSIBILITY AND CONFIRMATION OF ACCURACY FOR THE ANNUAL REPORT

To the best of my knowledge and belief, I confirm that:

All information and amounts disclosed throughout the annual report are consistent. The annual report is complete, accurate and is free from any omissions. a) The annual report has been prepared in accordance with the guidelines on the annual report as issued by National Treasury. b) The Annual Financial Statements (Part E) have been prepared in accordance with the modified cash standard and the relevant frameworks and guidelines issued by the National Treasury. c) The Accounting Officer is responsible for the preparation of the annual financial statements and for the judgements made in this information. d) The Accounting Officer is responsible for establishing, and implementing a system of internal control that has been designed to provide reasonable assurance as to the integrity and reliability of the performance information, the human resources information and the annual financial statements. e) The external auditors are engaged to express an independent opinion on the annual financial statements.

In my opinion, the annual report fairly reflects the operations, the performance information, the human resources information and the financial affairs of the department for the financial year ended 31 March 2015.

______N Mokhesi HoD: Human Settlements

Date: 24 August 2015

6. STRATEGIC OVERVIEW

6.1 Vision

Integrated and sustainable human settlements

6.2 Mission

The department will develop cohesive, sustainable and integrated human settlements in the Free State

6.3 Values

The department‟s inherent values as informed by, amongst others, Batho Pele Principles are:

 Professionalism, Integrity and Leadership  Value for money and Accountability  Partnership  Compassion and Empathy  Restoration of Dignity and Resilience  Environment Friendly

7. LEGISLATIVE AND OTHER MANDATES

7.1 Legislative and Other Mandates

7.1.1 Constitutional Mandate

Section 26(1) of the Constitution of the Republic of South Africa (Act No 108 of 1996) provides that everyone has the right to have access to adequate housing and subsection (2) obligates and enjoins the state through the Department of Human Settlements to use legislative and other measures to ensure the progressive realisation of this right.

7.2 Legislative Mandates

7.2.1 Public Finance Management Amended Act, 1999 (Act 29 of 1999)

To regulate financial management in the national and provincial governments; to ensure that all revenue, expenditure, assets and liabilities of those governments are managed efficiently and effectively; to provide for the responsibility of persons entrusted with financial management in those governments; and provide for matters connected therewith.

7.2.2 Public Service Act, 1994 (Act 103 of 1994)

To provide for the organisation and administration of the public service of the Republic, the regulation of the conditions of employment, terms of office, discipline, retirement and discharge of members of the public service, and matters connected therewith.

7.2.3 Public Service Laws Amendment Act, 1997 (Act 47 of 1997 and 86 of 1998)

To amend the Public Service Act, 1994, so as to further define, to substitute or to delete certain expressions; to further regulate the application of the said Act; to provide for the readjustment of the functions of the Public Service Commission and the circumscription of the functions of the Minister for the Public Service and Administration and an executing authority; to make other provision in connection with the management, administration and functions of the South African Management and Development Institute and the administration of the Training Fund; to make further provision in connection with the implementation or limitation of actions affecting the public service or its members; to enable the said Minister to have access to certain documents and information; to make further provision in connection with the power of the President to amend Schedules 1 and 2 to the said Act; to make other provision in connection with the inclusion of posts in, or the exclusion of posts from, the A or B division; to make further provision in connection with appointments, promotions and transfers; to make further provision in connection with the discharge of officers; to further regulate inefficiency and misconduct; to further regulate the receipt of unauthorised remuneration; to make other provision in connection with the reduction of salaries of officers; to make further provision in connection with grievances of officers and employees; to empower the said Minister to make regulations; and to empower the said Minister to assign certain functions to officers or employees of his or her department; and to repeal or to amend other laws relating to the public service so as to remove obsolete provisions or to effect certain consequential amendments arising from the readjustment of the functions of the said Commission; and to provide for incidental matters.

7.2.4 Skills Development Act, 1998 (Act 97 of 1998)

To provide an institutional framework to devise and implement national, sector and workplace strategies to develop and improve the skills of the South African work force; to integrate those strategies within the National Qualifications Framework contemplated in the South African Qualifications Authority Act, 1995; to provide for Iearnerships that lead to recognised occupational qualifications; to provide for the „financing of skills development by means of a levy-grant scheme and a National Skills Fund; to provide for and regulate employment services; and to provide for matters connected therewith.

7.2.5 Labour Relations Act, 1995 (Act 66 of 1995)

The Labour Relations Act and collective agreements shall regulate matters of mutual interest between employees and the State as employer.

7.2.6 Preferential Procurement Policy Framework Act, 2000 (Act 5 of 2000)

To regulate procurement of goods and services for the Department in compliance with section 217 of the Constitution by ensuring that all procurement processes are fair, transparent, equitable, competitive and cost effective.

7.2.7 Division of Revenue Act 2014/15

To provide for the equitable division of revenue raised nationally among the national, provincial and local spheres of government for the 2014/15 financial year; to provide for reporting requirements for allocations pursuant to such divisions; to provide for the withholding and the delaying of payments; to provide for liability for cost incurred in litigation in violation of the principles of co-operative governance and intergovernmental relations; and to provide for matters connected therewith.

7.2.8 Conversion of Certain Rights into Leaseholds or Ownership Act, 1998 (Act 81 of 1988

This Act provides for the conversion of certain rights of occupation issued to a holder of a site situated in a township whether such township has been formalized or not- established under the now revoked Black Communities Act 4 of 1984, into leasehold or ownership. The Act therefore makes provision for the determination of affected sites or persons; an inquiry into affected sites; grievance (appeal) procedures; and the issuing of leaseholds or transfer of ownership.

7.2.9 Black Communities Development Act, 1994 (Act 4 of 1984)

The Act was repealed save for Chapter 6 and the Regulations thereto. As will appear from the above paragraph, this Act is the principal Act 81 of 1988 and makes provision for the designation of certain areas as development areas and makes provision for township establishment.

7.2.10 Upgrading of Land Tenure Rights Act, 1991 (Act 112 of 1991)

This Act makes provision for the upgrading of informal rights, viz., and the deeds of grant, leaseholds and quitrent title permission to occupy.

7.2.11 Interim Protection of Informal Land Rights Act, 1996 (Act 31 of 1996)

This Act recognizes certain informal rights to land. One of the functions of the section is to resettle people who are unlawfully occupying land. In the process, it is incumbent on the section to ensure that the informal rights to land are recognized in the process of such resettlement.

7.2.12 The Housing Act, 1997 (Act 107 of 1997)

Through this legislation, existing and future, and the Housing Code, the Department of Housing is carrying out its legislative imperative as set out in the Housing Act, 1997. Section 2 of the Housing Act, 1997 (Act No. 107 of 1997) compels all three spheres of government to give priority to the needs of the poor in respect of housing development (section 2(1)(a)). In addition all 3 spheres of government must ensure that housing development provides as wide a choice of housing and tenure options as is reasonably possible:

(ii) is economically, fiscally, socially and financially affordable and sustainable (iii) is based on integrated development planning (iv) is administered in a transparent, accountable and equitable manner, and upholds the practice of good governance (Section 2(1)(c)).

7.2.13 Prevention of Illegal Eviction from and Unlawful Occupation of Land Act, 1998 (Act 19 of 1998)

The Prevention of Illegal Eviction from and Unlawful Occupation of Land Act was promulgated in 1998. The Act repeals the Prevention of Illegal Squatting Act No. 52 of 1951 and makes provision for a fair and equitable process to be followed when evicting people who have unlawfully invaded land, from their homes. The Act also makes it an offence to evict legally without due process of law.

7.2.14 The Housing Consumers Protection Measures Act, 1998 (Act 95 of 1998)

The Act provides for the establishment of a statutory regulating body for homebuilders. The National Home Builders Registration Council will register every builder and regulate the home building industry by formulating and enforcing a code of conduct. The implementation of the Act is monitored continuously.

7.2.15 The Rental Housing Act, 1999 (Act 50 of 1999)

This Act repeals the Rent Control Act of 1976 and defines Government‟s responsibility for rental housing property. It creates mechanisms to promote the provision of rental housing and the proper functioning of the rental housing market. To facilitate sound relations between tenants and landlords, it lays down general requirements for leases and principles for conflict resolution in the rental-housing sector. It also makes provision for the establishment of Rental Housing Tribunals and defines the functions, powers and duties of such Tribunals. Provincial housing departments are establishing Rental Housing Tribunals.

7.2.16 Home Loan and Mortgage Disclosure Act, 2000 (Act 63 of 2000)

The Act provides for the establishment of the Office of Disclosure and the monitoring of financial institutions serving the housing credit needs of communities. It requires financial institutions to disclose information and identities discriminatory lending patterns. The act will come into operation during 2003.

7.2.17 Subdivision of Agricultural Land Act, 1970 (Act 70 of 1970)

This Act is used for Town Planning advice to the Department of Land Affairs on the subdivision of agricultural land.

7.2.18 The Development Facilitation Act, 1995 (Act 67 of 1995)

This Act provides directive principles to guide the drafting, adoption and implementation of all policies and legislation for all spheres of government regulating spatial planning, land use management and land development.

7.2.19 The Townships Ordinance No. 9 of 1969

This Ordinance is used for the establishment of towns, subdivision and consolidation, amendment of the general plan and the amendment of town-planning schemes. The townships board is also instituted in terms of this ordinance.

7.2.20 Disestablishment of South African Trust Limited Act, 2002 (Act 26 of 2002)

The winding down of the South African Housing Trust and the transfer of functions relating to financial obligations were completed during the end of 2002 and the beginning of 2003 in terms of Act 2002: Disestablishment of SA trust Limited Act, 2002.

7.2.21 The Removal of Restrictions Act, 1967 (Act 84 of 1967)

In terms of this act land use is changed either by means of title conditions or rezoning.

7.2.22 The Less Formal Township Establishment Act, 1991 (Act 113 of 1991) This Act is specifically for guiding rapid township establishment where housing is in dire need.

7.2.23 The Physical Planning Act, 1991 (Act 125 of 1991)

This Act governs secondarily deals with land uses on farmland that is not agriculture related by way of permits and it also enables the amendment of guide plans and the evaluation of consistency regarding land development.

7.2.24 Public Audit Act, 2004 (Act 25 of 2004)

Regulates the audit of Government Departments and State Owned Enterprises.

7.2.25 Social Housing Act, 2008 (Act 16 of 2008)

Regulates the Social Housing Market

7.2.26 Spatial Planning and Land Use Management Act, 2013 (Act 16 of 2013)

This Act provides a framework for the monitoring, coordination and review of the spatial planning and land use management system. It also provides for the establishment, functions and operation of Municipal Planning Tribunals.

7.2.27 Housing Development Agency Act, 2008 (Act 23 of 2008)

The Act establishes the Housing Development Agency; provides for its functions and powers; and provides for matters connected therewith.

The objects of the Housing Development Agency are to: o Identify, acquire, hold, develop and release state, communal and privately owned land for residential and community purposes and for the creation of sustainable human settlements o Project manage housing development services for the purposes of the creation of sustainable human settlements o Ensure and monitor that there is centrally coordinated planning and budgeting of all infrastructure required for housing development, and o Monitor the provision of all infrastructures required for housing development.

Implication

The Free State Department of Human Settlements has concluded a Development Agreement with the HDA, and any future agreements should be aligned to the objects of the Agency.

7.2.28 National Environmental Management Act, 1998 (Act 107 of 1998)

The National Environmental Management Act (Act No. 107 of 1998) (NEMA) provides for co-operative environmental governance by establishing principles for decision-making on matters affecting the environment, institutions that will promote cooperative governance and procedures for co-ordinating environmental functions exercised by organs of state; for certain aspects of the administration and enforcement of other environmental management laws; and for matters connected therewith.

Section 24 of NEMA prohibits the undertaking of activities (including housing development) without the assessment of the impact of these activities on the environment, and subsequent authorisation from the designated competent authorities.

Implication

All housing developments require an environmental authorization before the development or any construction activities may proceed, which may include an environmental impact assessment process.

7.3 Policy Mandates

7.3.1 National Development Plan

Chapter nine of the NDP (Transforming Human Settlements) addresses the various housing/settlement issues South Africa is currently facing. In terms of transforming human settlements, the NDP states the following objectives:

 Strong and efficient spatial planning system, well integrated across the spheres of government.  Upgrade all informal settlements on suitable, well-located land by 2030.  More people living closer to their places of work.  Better quality public transport.  More jobs in or close to dense, urban townships.

7.3.2 National Spatial Development Perspective

The National Spatial Development Perspective (NSDP) became national policy in 2002 and was revised 2006. The key objectives of the NSDP are to:

 Provide a framework for discussing the space economy taking deprivation, resources, infrastructure and potential economic activity into account;  Establish a common reference point for national, provincial and local government to analyse and debate the development potential of different places in the country;  Identify key areas of tension and/or priority in achieving positive spatial outcomes with government infrastructure investment and development spending; and  Provide national government‟s strategic response to the above for a given timeframe.

7.3.3 The Housing Code, 2009

Government has introduced a variety of programmes which provide the poor households access to adequate housing in terms of the Housing Act, 1997 (Act No 107 of 1997). The policy principles set out in the White Paper on Housing aim to provide poor households with houses as well as basic services such as potable water and sanitation on an equitable basis.

The National Housing Code; 2000 was substantially revised and consequently the new National Housing Code, 2009 was introduced. The 2009 Code is aimed at simplifying the implementation of housing projects by being less prescriptive while providing clear guidelines.

The National Housing Code, 2009 further sets the underlying policy principles, guidelines, norms and standards that apply to Government‟s various housing assistance programmes introduced since 1994 and subsequently updated.

7.3.4 Comprehensive Plan for Sustainable Human Settlements (BNG)

Ten years after the introduction of the housing programme in 1994, a comprehensive review was undertaken of the outcomes of the programme and the changes in the socio-economic context in the country. This lead to the approval of the Comprehensive Plan for Sustainable Human Settlements commonly referred to as “Breaking New Ground” or “BNG”, by Cabinet in September 2004. While retaining the basic principles of the Housing White Paper, the Comprehensive Plan shifts the focus to improving the quality of housing and housing environments by integrating communities and Settlements.

It also sets new minimum standards for housing products improving privacy and sustainability by providing for the development of a range of social and economic facilities in housing projects

The Comprehensive Plan also focuses on Informal Settlement Upgrading to meet the Millennium Goals of the United Nations to improve the lives of slum dwellers.

7.3.5 2014-2019 Medium Term Strategic Framework

The national Department of Human Settlements has developed a Draft Framework to Achieve Outcome 8 and the National Development Plan (NDP) Vision 2030. The Strategic Framework covers the medium term from 2014-2019. The draft 2014-2019 Medium Term Strategic Framework will focus on policy and funding reforms to achieve the following:

a) Better spatial planning to better target resource allocation b) Ensuring that poor households have adequate housing in better living environments c) Supporting the development of a functionally and equitable residential property market d) Improving institutional capacity and coordination.

7.3.6 Free State Growth and Development Strategy

The revised Free State Growth and Development Strategy (FSGDS) recognises the value of creating the environment, institutions, processes and mechanisms crucial for inclusive growth and development and produced Free State Vision 2030, aligned with the National Development Plan.

Driver 9: Facilitate sustainable human settlements of the FSGDS states that the status of human settlements is mostly extremely low densities, low levels of efficiency and long distances between places of employment and places of work. In order to improve economic efficiency, the FSGDS proposes that efficient resource use should be prioritised

7.3.7 Provincial Spatial Development Framework

The Free State Provincial Spatial Development Framework (PSDF) is a provincial spatial and strategic planning policy that responds to and complies with the relevant legislation and policy. SPLUMA provides for all spheres of government to compile and publish a spatial development framework. The NDP encourages all spheres of government to prepare SDFs that promote a developmental state in accordance with the principles of global sustainability. 7.3.8 State of the Nation Address (SONA)

During the SONA, The honourable State President announces the National commitments of the Government in service delivery for that particular performance/ financial year.

7.3.9 State of the Province Address (SOPA)

During the State of the Province Address, the honourable Premier of the Free State Province announces the Provincial government priorities on service delivery which are aligned to the State of The Nation Address.

7.3.10 Human Settlements Strategy for the Free State Province

The purpose of the Free State Human Settlements Strategy is to guide a longer term spatial and investments perspective that will inform the programming of human settlements projects in the Province.

7.3.11 Intergovernmetal strcutures

(a) President‟s Coordinating Council

The Forum provides for the engagement at National level of relevant stakeholders to ensure that the national government objectives are realised.

(b) Premier‟s Coordinating Forum The Forum provides for the engagement at Provincial level of relevant stakeholders to ensure that the provincial government objectives are realised.

7.3.12 Provincial Specific Programme

(a) Operation Hlasela

This is a specific provincial programme focusing on intergrated service delivery. All the Departments activities are coordinated to ensure intergrated human settlements.

MEMBER OF THE EXECUTIVE COUNCIL: COOPERATIVE GOVERNANCE, TRADITIONAL AFFAIRS AND HUMAN SETTLEMENTS

8 ORGANISATIONAL STRUCTURE OFFICE OF THE MEC

DEPARTMENT OF HUMAN SETTLEMENTS

Head of Department

SEC MAN & ANTI-CORRUPTION OFFICE OF THE HoD

INTERNAL AUDIT

HUMAN SETTLEMENT PLANNING AND -DEILVERY Deputy Direkctor-General

LEGAL AND CONTRACT SERVICES FINANCIAL AND -SUPPLY CHAIN MANAGEMENT CORPORATE SERVCIES

HS DEVELOPMENT PLANNING HS PROGRAMME IMPLEMENTATION HS PROJECT MANAGEMENT AND DEVELOPMENT INSTRACTURE DELIVERY AND ADMINISTRATION FINANCIAL AND MANAGEMENT ACCOUNTING DEPARATMENTAL PLANNING AND PERFORMANCE MANAGEMENT

HUMAN SETTLEMENT DELIVERY PLANNING PROGRAMME DESIGNING HUMAN SETTLEMENT INFRASTRUCTURE HUMAN SETTLEMENTS GRANT MANAGEMENT HUMAN RESOURCES MANAGEMENT AND PERFORMANCE MONITORING AND ALLOCATION MANAGEMENT DEVELOPMENT AND -MANAGEMENT AND - DEVELOPMENT

STAKEHOLDER ENGAGEMENT PRIORITY AND INTERVENTION HOUSING PROJECT SUPPLY CHAIN- AND ASSET MANAGEMENT INFORMATION AND PLANNING AND MOBILIZATION PROGRAMMES PLANNING AND - MANAGEMENT COMMUNICATION TECHNOLOGY

INFORMAL SETTLEMENTS AND LAND TENURE AFFORDABLE HOUSING PROGRAMMES TECHNICAL SERVICES RISK MANAGEMENT

DISTRICT OFFICE DC 16 MANGAUNG OFFICE DISTRICT OFFICE DC 18 DISTRICT OFFICE DC 19 DISTRICT OFFICE DC 20

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PART B: PERFORMANCE INFORMATION

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1. AUDITOR GENERAL’S REPORT: PREDETERMINED OBJECTIVES

Predetermined objectives

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 department for the year ended 31 March 2015:  Programme 2: Housing needs, research and planning on pages 45 to 46

 Programme 3: Housing development on pages 46 to 53

I evaluated the reported performance information against the overall criteria of usefulness and reliability.

I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury‟s annual reporting principles and whether the reported performance was consistent with the planned programmes. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme performance information (FMPPI).

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

The material findings in respect of the selected programmes are as follows:

Programme 2: Housing needs, research and planning

Reliability of reported performance information

The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. I was unable to obtain the information and explanations I considered necessary to satisfy myself as to the reliability of the reported performance information. This was due to the completeness of source documentation in support of actual achievements not being monitored and the validity of reported achievements not being frequently reviewed against source documentation.

Programme 3: Housing development

Reliability of reported performance information

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The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Adequate and reliable corroborating evidence could not be provided for 29% of the targets to assess the reliability of the reported performance information. The auditee‟s records did not permit the application of alternative audit procedures. This was due to the completeness of source documentation in support of actual. Achievements not being monitored and the validity of reported achievements not being frequently reviewed against source documentation.

Additional matters

I draw attention to the following matters:

Achievement of planned targets

Refer to the annual performance report on pages 45 to 47 and 47 to 53 for information on the achievement of planned targets for the year. This information should be considered in the context of the material findings on the reliability of the reported performance information for the selected programmes reported in paragraphs 23 and 24 of this report.

Compliance with legislation

I performed procedures to obtain evidence that the department 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: Strategic planning and performance management

Effective, efficient and transparent systems of internal control with respect to performance information and management was not maintained as required by section 38(1)(a)(i) of the PFMA.

2. OVERVIEW OF DEPARTMENTAL PERFORMANCE

2.1. Service Delivery Environment

Main services Beneficiaries Current/actual Desired standard Actual achievement standard of of service service Subsidy  Municipalities Same as actual Number of 3642 Complied with the Administration  Housing beneficiaries customers beneficiaries standard  Contractors allocated housing  Housing institutions subsidies (e.g. NHBRC) Affordable  Tenants Same as actual Provision of social  Social Housing 246 Housing  Municipalities customers housing and rental  Rental Housing 414  Housing institutions housing Complied with the standard

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(e.g. NHBRC) Consumer  Housing beneficiaries Same as actual Number of 6 Municipalities awareness on  Municipalities customers municipalities Complied with the standard government  Community earmarked for programmes Development Workers accreditations from (CDW‟s) level 1 to 3

2.2. Service Delivery Improvement Plan

Type of Actual customers Potential customers Actual achievements arrangement Road shows Rural communities Rural communities More consultation with customers Formal meetings Homeless people Homeless people Makgotla All that qualify in terms of the All that qualify in terms of the housing Informal housing scheme scheme meetings All municipalities All municipalities

Service delivery access strategy

Access strategy Actual achievement The department commits itself to share information with its Easier accessibility clients in line with the provisions of the Promotion of Access to Information Act of 2000 (Act of No. 2 of 2000). Furthermore, the department also shares information by means of the following:  Telephonically and per facsimile as available per Switchboard receives call from Monday to Friday from 07H30 – telephone directory 16H00  Annual Performance Plan and Annual Report The two documents in question are publish annually for transparency and accountability purpose in order for the public to know how each cent was spend and for what purpose  Physically at government offices All buildings are accessible to customers and people living with disabilities  Internet as per web site www.fscogtahs.gov.za  Help desk 7th Floor, OR Tambo House, Cnr. St Andrews and Makgraaff Str

Service information tool TYPES OF INFORMATION TOOLS ACTUAL ACHIEVEMENT  Telephonically and per facsimile as available per Switchboard receives call from Monday to Friday from 07H30 – telephone directory 16H00  Annual Performance Plan and Annual Report The two documents in question are publish annually for transparency and accountability purpose in order for the public to know how each cent was spend and for what purpose  Physically at government offices All buildings are accessible to customers and people living with disabilities  Internet as per web site www.fscogtahs.gov.za  Help desk 7th Floor, OR Tambo House, Cnr St Andrews and Makgraaff Str

Complaints mechanism Complaints mechanism Actual achievement  Help Desk Addressed complaints  Telephonically/facsimile as per telephone directory Switchboard available with operating hours from 07H30 – 16H00, Monday to Friday  Electronically via Provincial Website/Intranet/E- Website available at www.fscogtahs.gov.za mail

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 MEC‟s community outreach programmes Monthly visits to the sites to evaluate service delivery  Media briefings The MEC regularly brief the media on service delivery issues, policies and achievements  General complaints The office of the HOD speedily responds to any complaints that has a potential to impact negatively on service delivery.

2.3. Organisational environment

The developments of 2014/2015 are as follows:

2.3.1 Programme 1

. The department was assessed by the Department of Planning Monitoring and Evaluation and scored 32% against all standards set in the Management Performance Assessment Tool (MPAT). The controls and systems were enhanced in order to ensure improvement during the 1.4 MPAT assessment period. . The communication unit continued to support both the administration and political office in marketing, responding to issues raised by the media in the endeavour to uphold the departmental good image despite shortage of personnel. . The office space for the departmental personnel is still a challenge and the department has been in constant contact with the Department of Public Works and Infrastructure address the matter in question.

2.3.2 Programme 2

The drafting of national framework is the competence of the National Department of Human Settlements within which the provincial departments craft their province specific policy or legislation. The national department established a Human Settlement Policy and Strategy Development Task Team that focuses on the process of identifying the gaps, identifying research needs, projects and conducting research to inform future planning and drafting of relevant pieces of legislation.

2.3.3 Programme 3

The following performance was recorded in the 2014/2015 financial year against key performance areas:

 5313 new housing units (including social and rental housing) are completed in the province across all housing programmes being utilised by the province  1154 Deeds of transfer registered in favour of qualifying beneficiaries  1920 New sites connected to basic water and sanitation services as part of the Integrated Residential Development Programme  3774 Households connected to basic services as part of the Informal Settlements Upgrading Programme  3791 New applications approved on HSS  5 township registers opened  5615 erven planned and surveyed  1646 job opportunities created through resettlement and housing construction projects

Challenges

 Capacity constraints  Prolonged procurement processes  Difficulty in acquisition of sites for military veterans

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 Change in priorities where expenditure had to be fast tracked  Insufficient capacity  Slow construction progress due adverse weather,  Failed mortgage approvals at the banks because of over indebtedness of prospective applicants 2.3.4 Programme 4

The department has transferred 28 houses to qualifying beneficiaries and as a result reduced the departmental debt related to the maintenance of those houses. A process of transferring the remaining houses is at an advanced stage.

2.4. Key policy developments and legislative changes None

3. STRATEGIC OUTCOME ORIENTED GOALS

Strategic Goal 1: Creation of a department geared towards service excellence Strategic Goal 2: Management of Housing Interventions Strategic Goal 3: Improved housing delivery planning Strategic Goal 4: Management of housing assets and the Extended Enhanced Discount Benefit Scheme (EEDBS)

4. PERFORMANCE INFORMATION BY PROGRAMME

4.1. Programme 1: Administration

Purpose: To provide overall management in the department in accordance with all applicable acts and policies

Office of the MEC Corporate Services

Strategic Objective To provide corporate services that are non-core to the department

Strategic objectives, performance indicators, planned targets and actual achievements

PROGRAMME 1 ADMINISTRATION

Programme / Sub-programme: Office of the MEC Strategic Objective: To provide the functioning of the office of the MEC Performance Indicator Actual Planned Actual Deviation Comment on Achievement Target Achievement from deviations 2013/2014 2014/2015 2014/2015 planned target Functionality of Management Level 1 Structures: Management structures with 1 1 - - formal terms of reference in

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Meetings scheduled and held: Management decisions documented and clear, 1 1 - - responsibility allocated and followed through Senior Management Meetings 1 1 - - agenda focuses on strategic objectives and priorities of the Department as per the Strategic plan and APP 1. Good governance and 1 1 - - accountability practices in place in the department: Delegations: Approved Executive Authority & Head of Department. (i) Delegations approved 1 1 - - in compliance with the PSA & PSR (ii) Delegations from 1 1 - - Executive Authority & Head of Department and all relevant levels appropriate Strategic plans Level 4 1 1 - - Strategic plans compliant with Treasury Regulations and planning guidelines in respect of submission dates and format Link between Strategic Plan, Outcome 8; MTSF / FSGDS clear and follows a logic progression

Performance of the Department against the strategic plan is revised during the 2014-2019 period Annual Performance Plans - Annual Performance Plan Level 2 1 1 - complies with Treasury Regulations and planning guidelines in respect of format and submission dates Quarterly Performance 1 1 - - Reports submitted to EA and Treasury on time

Annual Performance Plan contains updated analysis on information relevant to 1 1 - - external and internal factors, strategic objectives and performance indicators which conform to SMART principles

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Management meets towards 1 1 - - exploring quarterly performance information

 Performance targets 1 1 - - substantially met and expressed in Annual Report

Monitoring and Evaluation: Level 2 Integration of monitoring and evaluation in performance and strategic management 1 1 - - M&E Policy Framework approved / updated Standardized mechanisms and/or processes and procedures in place to collect, 1 1 - - manage and store data that enable the monitoring of progress made towards achieving departmental goals, targets and core objectives Service Delivery Improvement Mechanisms: Service Delivery Charter, Level 1 1 1 - - service standards and SDIP approved and displayed Was awaiting the Stakeholders / service 1 - -1 inputs from DPSA recipients on service regarding the plan to standards and SDIP consulted enable its implementation. Awaiting inputs from Compliance to service delivery 1 - -1 DPSA regarding the standards and implementation plan that was of the approved SDIP submitted to enable monitored implementation MPAT Implementation: - MPAT Self-Assessment for 1 1 - - current cycle completed and signed-off by Head of Department

MPAT results discussed by Senior Management 1 1 - -

MPAT Improvement Plan 1 1 - - developed for current cycle

MPAT Improvement Plan for 1 1 - - previous cycle monitored quarterly Management of Performance: Level 3 Implementation of Level 1 - 12 PDM System 1 1 - - Approved PDMS Policy in place Annual assessment for previous cycle finalized by due 1 1 - -

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Moderation for previous cycle 1 1 - - by due date

Performance outcomes in 1 1 - - relation to the development of employees, the management of poor performance and the recognition of performance actively managed by the Department Mid-year assessments and 1 1 - - feedback sessions for current 6-months cycle performed Management of Performance: Level 2 1 1 - - Implementation of SMS Performance Management System (excluding Head of Department) (iii) Signed Performance Agreements signed and submitted by all SMS Members by the 31st of May (iv) Annual assessment for 1 1 - - previous cycle finalized by due date Moderation concluded for 1 1 - - previous cycle by due date Performance outcomes in 1 1 - - relation to the development of employees, the management of poor performance and the recognition of performance actively managed by the Department 1 1 - - Mid-year assessments and feedback sessions for current cycle performed Management of Performance: Level 2 Implementation of SMS Performance Management System for Head of Departments  Signed Performance Agreement for the current cycle submitted to EA by 1 - 1 - 31 May

Performance Agreement filed 1 1 - - with PSC

Changes as directed PSC 1 1 - No changes incorporated indicated yet

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Verification statement 1 1 - - submitted on time to relevant authority for the previous cycle Performance in relation to the 1 1 - - development of poor performance and recognition of performance managed Human Resource Strategy and Planning: Organizational Design and Implementation  Approved structure, Level 1 1 1 - - aligned with MTEF, implemented in the Department, with only funded vacancies captured on PERSAL  Approved structure based 1 1 - - on assessment of functions

 Structure reviewed 1 1 - - periodically, at least in the last 5 years towards aligning it with generic functional structures based on Service Delivery Model of the Department Assessment of accountability Level 3 mechanisms (Audit Committee):  Audit Committee in place and constituted in 1 1 - - accordance with Chapter 3 of the National Treasury Regulations  Audit Committee meets as 1 1 - - scheduled  Audit Committee has an 1 1 - - approved Audit Committee Charter with clearly defined objectives, key performance indicators and reviewed annually  Audit Committee assessed 1 1 - - by stakeholders such as AG and departmental managers . Audit Committee reviewed 1 1 - - management responses to audit issues and reports thereon Internal Audit: Assessment of Level 2 internal audit arrangements  Three-year strategic 1 1 - - internal audit plan and operational plan that is risk-based approved and

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monitored quarterly

 Internal audit charter 1 1 - - approved for internal audit unit  Internal assessment 1 1 - - conducted by internal audit unit in terms of ISPPIA 1311

 External review of internal 1 1 - - audit unit conducted at least once every 5 years in terms of ISPPIA 1312

 Internal audit 1 1 - - recommendations acted on by Management Ethics: Assessment of policies Level 2 and systems to ensure professional ethics  All SMS Members 1 1 - - completed financial disclosures, signed by EA and submitted to PSC by 31 Risk Management: Level 2 Assessment of risk management arrangements 1 1 - - 1. Risk Management Committee in place in accordance with Chapter 13 of risk management framework

2. Risk assessment or review 1 1 - - conducted by the Department

3. Risk assessment and risk 1 1 - - management implementation plan approved by the Accounting Officer and Audit Committee . Regular reports provided 1 1 - - to the Audit Committee by the Risk Management Committee on the implementation of the Risk Management Plan) a) Ethics: Assessment of policies and systems to ensure professional ethics  Mechanisms in place 1 1 - - towards providing /

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communicating the Code of Conduct to employees b) Human Resource Strategy Level 1 and Planning: Human Resources Development Planning 1 1 -  Approved annual HRD Plan submitted to DPSA (1st Draft by 31 March and final plan by 31 Mar)  HRD monitoring 1 1 - - questionnaire on implementation submitted (1st Draft by 31 March and final plan by 31 May) c) Human Resource Practices and Administration: Pay sheet certification

 Process of transferring and terminating staff in place 1 1 - - to avoid fruitless expenditure d) Human Resource Practices and Administration: Application of recruitment and retention practices  Recruitment process with clear roles and 1 1 - - responsibilities approved and fully and consistently implemented  Exit interviews 1 1 - - conducted with all employees leaving the Department  Exit interviews 1 1 - - analysed and remedial actions taken if necessary Human Resource Practices and Administration: Management of diversity  Job Access Strategic 1 - -1 Skill capacity Framework constraints Implementation Plan in place Special programme  Gender Equality 1 - -1 Officer has been Strategic Framework appointed and is Implementation Plan undergoing training in place  Job Access Strategic 1 - -1 Framework Implementation

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Report submitted to DPSA 6-monthly

 Gender Equality 1 - -1 Strategic Framework Implementation Report submitted to DPSA 6-monthly e) Human Resource Practices and Administration: Management of Employee Health  EH&W Operational Plan, addressing 1 1 - - Gender and Human Rights Dimensions of HIV&AIDS and TB in place.  Systems Monitoring 1 1 - - Tool (SMT) report submitted to DPSA by 30 September.  All 4 Employee Health 1 1 - - and Wellness Policies implemented.

 Approved GSRB HIV&AIDS 1 - -1 Underachievement: Mainstreamed GSRB mainstreamed Operational Plans for HIV operational the next financial year plans are still in draft. submitted to DPSA by 31 March 2014

 Quarterly and Annual The quarterly review EH&W report will be Implementation 4 3 -1 submitted at the end Review reports of April 2015, due to submitted to DPSA by misalignment of the the timeframes of Non-  following dates: Financial Reporting - 31st July and the DPSA - 31st October - - 31st January - 15th May f) Employee Relations: Management of disciplinary cases  Disciplinary cases - - - Captured on finalized within policy PERSAL requirements and captured on PERSAL (with no suspensions longer than 60 days and cases finalized within 90 days of identification and 60 days from notice)

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 Analysis conducted on 1 1 - - nature of misconduct and/or preventative measures implemented unless the Department has less than 10 disciplinary cases for the previous 12 Months No. of Monthly Key Control 12 11 -1 No report is expected Matrix Reports submitted to during December Provincial Treasury according Treasury instructions. No. of Quarterly Key Control 4 4 - - Matrix Reports submitted to Provincial Treasury Delegations: Approved Head Level 3 of Department delegations for financial administration in terms of the PFMA  Delegations approved in alignment to 1 - -1 Delegations are in a National Treasury draft form guidelines and approved structure  Delegations from Head 1 - -1 Delegations are in a of Department to all draft form relevant performer levels appropriate for the levels Supply Chain Management: Level 2 Demand Management  Procurement plan i.r.o 1 1 - - departmental procurement above R500,000 that meets Treasury requirements approved and submitted to Treasury by 30 April  Demand Management Plan 1 1 - - that covers all the departmental procurement needs above and below R500,000 approved  Reports on the 1 1 - procurement plan regularly reviewed Supply Chain Management: Level 1 Acquisition Management  Supplier database in place 1 1 - - that meets NT minimum requirements  Bid Committees in 1 1 - - place and meeting when required

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 Code of Conduct signed by 1 1 - - Bid Committee Members and SCM practitioners

Supply Chain Management: Logistics Management  Policy / processes for the - 1 1 - - setting of inventory levels, placing of orders, receiving, inspection and issuing of goods documented  Internal customer 1 - -1 The internal satisfaction survey customer survey has conducted and actions been developed and taken on findings. will be implemented in the new financial year Supply Chain Management: Level 1 Disposal Management  Disposal strategy / policy in 1 1 - - place and implemented

 Disposal Committee 1 1 - - appointed and meetings held

 Record of redundant 1 1 - - assets unserviceable an obsolete assets maintained Expenditure Management: Level 1 Management of cash flow and expenditure vs. Budget  Cash-flow projection in 1 1 - - place and submitted to PT on time

 Expenditure v/s 1 1 - - planned budget regularly reviewed by Management and actions taken to prevent under/over expenditure  Reports provided 4 4 - - towards monitoring spending versus planned expenditure a) Expenditure Management: Payment of suppliers  Monthly exception reports on payment of 12 12 - - suppliers submitted to Provincial Treasury  Invoice tracking system 1 1 - - in place

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 Reports provided 4 4 - - towards monitoring the no. of invoices not paid within 30 days  Reasons for late or 4 4 - - non-payment of invoices investigated and effectiveness of business processes for managing payments reviewed where necessary Expenditure Management: Management of unauthorized, irregular, fruitless and wasteful expenditure  Process in place to prevent and detect 1 1 - - unauthorized, irregular, fruitless and wasteful expenditure  Unauthorized, irregular, 4 4 - - fruitless and wasteful expenditure identified and investigated, management findings communicated to responsible officials and disciplinary action taken against negligent officials  Audit findings on 1 1 - fruitless, unauthorized and irregular expenditure addressed. No. of reports produced 12 12 - - towards monitoring the utilisation of all vehicles in the department Human Resource Practices Level 2 and Administration: Pay sheet certification  Pay sheet certification 1 1 - - process in place  Pay sheet certification 12 12 - - process fully implemented on a monthly basis ICT: Corporate Governance of Level ICT  Approved: 1 1 - -1 The unit planned to - Corporate Governance outsource the of ICT Policy / development of Framework outstanding plans to - Corporate Governance SITA but could not of ICT Charter due to inadequate - ICT Plan funding. The plans - ICT Plan periodically (IT Plan, improved Implementation plan

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and Operational plan) will be developed in the new financial year Ethics: Prevention of 1 and Level 1 Corruption  Fraud Prevention Plan with 1 1 - - policy statement and implementation plan approved

 Whistle-blowing Policy and 1 1 - - implementation plan approved  Minimum Anti-Corruption 1 - -1 Draft MACC Capacity (MACC) implementation plan Requirements in development Implementation Plan phase. approved  Feedback provided to PSC 1 1 - - on anti-corruption hotline cases within 40 days  Disciplinary procedures 1 1 - - and/or criminal procedures and/or civil procedures applied where fraud and corruption occur Access to information Good governance and accountability practices in place in the Department in relation to access to information:  Good governance and 1 1 - Deputy Information Officer appointed / confirmed  Section 14 manual 1 1 - - updated annually and in compliance with all requirements;  Section 15 notice 1 1 - - issued, information disclosed voluntary and records made available  Section 32 report submitted to the Human  Rights Commission 1 1 - - annually, fully compliant with requirements Departmental communication planning, strategy development and implementation: 1 1 - -

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 Communication Strategy and implementation plan developed and approved 1 1 - -  Effective involvement in the development and implementation of the LGCS, Provincial communication strategy Effective implementation and 1 2 +1 Overachievement is management of campaigns a result of the continued marketing of FLISP. Effective management and 1 3 +2 More channels were use of appropriate used for communication channels dissemination of information:  Provincial write-ups  Branding – creations  Internal communication channels  Use of media for publicity  Radio interviews Building and sustaining a 1 3 +2 Continuous positive reputation of the interaction with Help Department Desk enquiries to address public concerns

Continuously addressing media queries to ensure that a good reputation is maintained Effective management of 1 1 - unplanned and urgent communication Suitable accommodation 1 1 - secured for the Department Effective record management practices applied in the Department:  Record Management 1 1 - - Policy approved and/or updated.

 Record Management 1 - -1 Policy fully implemented The Department is in the process of training officials in records management

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Reasons for deviations

Reasons for deviations are provided in comment on deviations column above

Strategy to overcome areas of underperformance

Strategies to overcome under-performance are provided in the columns of the tables above.

Changes to planned targets

None

Sub-programme expenditure: Programme 1

Sub- 2014/2015 2013/2014 Programme Final Actual (Over)/Under Final Actual (Over)/Under Name Appropriation Expenditure Expenditure Appropriation Expenditure Expenditure

R’000 R’000 R’000 R’000 R’000 R’000 Corporate 80485 77314 3171 68672 68257 415 Services

Total 80485 77314 3171 68672 68257 415

4.2. Programme 2: Housing Needs, Research and Planning

Purpose: To facilitate and undertake housing delivery The programme consists of four sub-programmes:  Policy  Planning  Research

Strategic objectives, performance indicators, planned targets and actual achievements

PROGRAMME 2: HOUSING NEEDS, RESEARCH AND PLANNING

Programme / Sub-programme: Planning Strategic Objective: Planning for Human Settlements delivery Performance Actual Planned Actual Deviation from Comment on deviations Indicator Achievement Target Achievement planned target 2013/2014 2014/2015 2014/2015 to Actual Achievement for 2014/2015 No. of houses enrolled 3299 5000 14212 Projects from the previous with NHBR financial years form part of these +9212 enrolments

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A Multi Year Housing 0 1 - -1 The HDA has been mandated to Development Plan/ APP assist the 19 Local and 1 Metro developed by October Municipalities to craft and/or approved review their Housing Chapters as part of the 2014/2015 MTOP These Housing Chapters are to be consolidated into and inform the Multi Year Housing Development Plan The Department and the HDA are in the process of finalizing the MTOP for the next five years

Number of projects 0 125 73 -52 Project strategy was changed to approved that of multi-year mega projects

Reasons for deviations

Reasons for deviations are provided in comment on deviations column above.

Strategy to overcome areas of underperformance

Strategies to overcome under-performance are provided in the columns of the tables above.

Changes to planned targets: None

Sub-programme expenditure: Programme 2

Sub- Programme 2014/2015 2013/2014 Name Final Actual (Over)/Under Final Actual (Over)/Under Appropriation Expenditure Expenditure Appropriation Expenditure Expenditure

R’000 R’000 R’000 R’000 R’000 R’000 Administration: 1941 1874 67 1507 1492 15 Policy: 2175 2129 46 1842 1831 11 Planning: 14437 13604 833 9845 9506 339 Total 18553 17607 946 13194 12829 365

4.3 Programme 3: Housing Development

Purpose To provide individual subsidies and housing opportunities to beneficiaries in accordance with the housing policy

 Financial Interventions  Incremental Interventions  Social and Rental interventions

Strategic objectives, performance indicators, planned targets and actual achievements

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PROGRAMME 3: HOUSING DEVELOPMENT, IMPLEMENTATION, PLANNING AND TARGETS

Programme / Sub-programme: Financial Intervention Strategic Objective: Facilitate immediate access to housing Goods and services creating enabling environments and providing implementation support Performance Actual Planned Actual Deviation from Comment on Indicator Achievement Target Achievement planned target to deviations 2013/2014 2014/2015 2014/2015 Actual Achievement for 2014/2015 Number of new 6758 7338 5313 -2025 Some contractors did housing units not perform very well completed in the and therefore the province across all department terminated housing or warned such programmes being contractors. utilised by the province Rains hindering contractors progress in the last quarter

Number of new sites 1273 4484 1920 -2564 Departmental connected to basic procurement water and sanitation committees were services as part of changed to cluster the Integrated committees which only Residential started work in the new Development financial year Programme Service providers have since been appointed late. This led to the poor achievement as a result service providers starting work late Number of 4315 3265 3774 +509 Due to additional funding households gazetted and transferred connected to basic to Mangaung Metro, services as part of they were able to the Informal connect and service Settlements more sites. Upgrading Programme

Programme / Sub-programme: FINANCIAL INTERVENTION Strategic Objective: Facilitating immediate access to Housing Goods and Services creating enabling environments and providing implementation support Performance Indicator Actual Planned Actual Deviation from Comment on Achievement Target Achievement planned target deviations 2013/2014 2014/2015 2014/2015 to Actual Achievement for 2014/2015 Number of low-income / affordable housing units constructed in prioritized areas

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9 250 13 -237 Over-indebtedness of (i) FLISP potential FLISP beneficiaries and some applications failed HSS searches because they are not 1st time buyers. (ii) Special 1724 320 -1404 Difficulty in the Programmes 0 acquisition of sites for  Military Veterans 6 military veterans. The  Teachers 201 database of the  Land Restitution 534 beneficiaries also took  Emergency long to finalise. 30 sites have been acquired in Mangaung and the contractor is in the process of being appointed

Slow contractor performance for teachers‟ cottages leading to his termination.

Challenges with regards to services on land restitution project in Kroonstad and housing committee administrative issues in Harrismith, hampered progress

(iii) *Rectification 722 197 238 +41 The contractors Programme managed to recover the - Dilapidated production time lost in (iv) Incomplete houses 338 9 2895 +2886 the previous quarter as a result of adverse weather.

(v) #BNG 4648 4358 422 -3936 Some contractors not performing well The department has issued termination letters to such contractors and warning letters to some.

Concentrate a bulk of the work to take place during the dry season.

No. of (new) applications 1383 6529 3791 -2738 The Department utilised approved on HSS existing applications previously captured on HSS in the respective areas where allocation have been made.

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Number of Deeds of transfer registered in favour of qualifying beneficiaries  Enhanced Extended 8 400 0 -400 The creation of the Discount Benefit database of Scheme (EEDBS) conveyancing firms to register these deeds took longer than anticipated  Act 81 of 1988 673 600 693 +93 More beneficiaries qualifying for the conversion of rights applied;

There was an additional resource capacity through the filling of vacant posts in the unit responsible for this KPI.  Act 107 of 1997 486 3165 461 -2704 The creation of the database of conveyancing firms to register these deeds took longer than anticipated.

Some properties are constructed on townships with outstanding township registers and delays in the signing of deeds documents. Late release of delegation of municipal manager delegation of powers. The conveyancing contract of the appointed firms provides for opening of township registers. No. of township registers 5 5 5 - - opened

No. of parcels of land 4 8 8 - identified and transferred to municipalities for development purposes

No. of erven planned and 1671 7726 5615 -2111 This is a lengthy multi- surveyed year process with milestones, undertaken by various stakeholders

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and completion of these is outside the Department‟s control. No. of municipalities 5 LM 6 6 - - supported towards supported accreditation towards readiness for level 1

1 Metro – Level 3 No. of houses handed over 3638 3165 932 -2233 The handover of title to beneficiaries together deeds is a function of with title deeds the Municipalities.

Underachievement is as a result of slow submission of control lists from Municipalities;

Some municipalities failing to comply with the reporting template despite this having been thoroughly work- shopped.

No. of municipalities 6 6 20 +14 The Free State supported for the expansion Provincial Government of the National Upgrading decided to develop the Support Programme : Provincial Strategy on - Metsimaholo Informal Settlements - Dihlabeng Upgrading, thus the - Matjhabeng inclusion of other - Moqhaka municipalities over and - Mangaung above the NUSP - Maluti-A-Phofung prioritised Municipalities. No. of job opportunities 0 5000 1646 -3354 Due to short span of created through jobs created as a result resettlement and housing of the nature of housing construction projects construction, not all of the jobs created could be recorded as job opportunities, therefore , only a few job opportunities were recorded

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Programme / Sub-programme: Incremental interventions Strategic Objective: Facilitate access to housing opportunities through a phased process providing implementation support Performance Indicator Actual Planned Target Actual Deviation Comment on Achievement 2014/2015 Achievement from planned deviations 2013/2014 2014/2015 target to Actual Achievement for 2014/2015 Km of roads constructed 4km 1.9 km 1.9 km - - in newly-formalized Viljoenskroon areas (Mphatlalatsane) No. of trainers 20 15 96 +81 The Department mentored on consumer extended the education mentoring to Community Development workers in Municipalities hence the over achievement No. human settlements 6 4 4 - - training/skills programmes conducted based on needs analysis. No. of partnerships 2 5 5 - - established and maintained towards improving human settlement delivery:  Capacity Building  Research  Funding  Internships – experiential training  Housing institutions No. of emerging youth – 0 10 24 +14 The department and women contractors particularly focused on mentored and supported the development of women contractors as recommended by the provincial strategy. 54% of the housing budget was allocated to women contractors over the 30% prescribed by the minister.

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No. of municipalities 0 20 0 -20 The programme was supported and put on hold until the capacitated on the data quality in the Housing Subsidy HSS could be System on line improved

The Department has since appointed a service provider for the updating of the HSS and the transfer skills No. of municipalities 0 20 0 -20 The programme was capacitated on the put on hold because successful roll-out National Department and/or maintenance of of Human Settlements the Housing Demand is in the process of Database (metro and redeveloping the local municipalities) National Housing Demand database.

The Department will therefore continue the roll-out after national has roll-out the system.

Programme / Sub-programme: Social and Rental Interventions Strategic Objective: Facilitating access to Rental Housing opportunities, supporting Urban Restructuring and Integration Performance Actual Planned Actual Deviation from Comment on deviations Indicator Achievement Target Achievement planned target 2013/2014 2014/2015 2014/2015 to Actual Achievement for 2014/2015 No. of CRU units 0 400 424 +24 Merriespruit CRU approved, upgraded No units were delivered and converted during 4th quarter of 2013/2014 due to labour and community unrests at the project site but with the calmness in the unrest during the first quarter of 2014/2015 contractors were able to finalize some of the outstanding units. No. of new 516 400 284 -116 Brandwag SH affordable rental The project needs to evict all units delivered the illegal occupants in the through Social refurbishment units and is Housing awaiting the said relevant Court Orders. Applications for Eviction Orders are serving before the High Court of SA in Bloemfontein and the outcome is still awaited

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Reasons for deviations

Reasons for deviations are provided in the comment on deviations column above.

Strategy to overcome areas of underperformance

Strategies to overcome under-performance are provided in the columns of the tables above.

Changes to planned targets

None

Sub-programme expenditure: Programme 3

Sub- Programme 2014/2015 2013/2014 Name Final Actual (Over)/Under Final Actual (Over)/Under Appropriation Expenditure Expenditure Appropriation Expenditure Expenditure

R’000 R’000 R’000 R’000 R’000 R’000 Administration 49574 48106 1468 50358 49564 794 Financial Interventions 211588 211559 29 193371 193380 -9 Incremental 756517 741662 14855 871359 871355 4 Interventions Social & Rental 110537 110534 3 286206 286201 5 Interventions Total 1128216 1111861 16355 1401294 1400500 794

4.4. Programme 4: Housing Assets Management and Property Management

Purpose

To provide effective management of housing

Strategic objectives, performance indicators, planned targets and actual achievements

PROGRAMME 4: HOUSING ASSETS MANAGEMENT

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PART C GOVERNANCE transferred (to others are occupied by beneficiaries) persons who have already • Top structures benefitted in other Sites government housing subsidy programmes.

The cases will be submitted to a legal process to determine the relevant course of action.

Programme / Sub-programme: : Housing properties maintenance Strategic Objective: Housing Properties Maintenance Performance Actual Planned Actual Deviation from Comment on deviations Indicator Achievement Target Achievement planned target to 2013/2014 2014/2015 2014/2015 Actual Achievement for 2014/2015 No. of rental units - - - - sold to beneficiaries • Rental top structure Sites

Programme / Sub-programme: Sale and transfer of housing properties Strategic Objective: To provide for the Sale and transfer of Rental Stock Performance Actual Planned Actual Deviation from Comment on deviations Indicator Achievement Target Achievement planned target 2013/2014 2014/2015 2014/2015 to Actual Achievement for 2014/2015 No. of housing 5 0 -5 No requests for maintenance assets maintained were received and the assets are being transferred to legitimate occupants No. of debtors 56 28 -28 Some units are not reduced per legitimately occupied and financial year others are occupied by (under which sub- persons who have already programme does benefitted in other this indicator fall) government housing subsidy programmes.

The cases will be submitted to a legal process to determine the relevant course of action.

Reasons for deviations

Reasons for deviations are provided in the comment on deviations column above.

Strategy to overcome areas of underperformance

Strategies to overcome under-performance are provided in the columns of the tables above.

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Changes to planned targets

Sub-programme expenditure: Programme 4

Sub- Programme 2014/2015 2013/2014 Name Final Actual (Over)/Under Final Actual (Over)/Under Appropriation Expenditure Expenditure Appropriation Expenditure Expenditure

R’000 R’000 R’000 R’000 R’000 R’000

Administration 964 770 194 1007 175 832 Total 964 770 194 1007 175 832

5. TRANSFER PAYMENTS

5.1 Transfer payments to public entities

Name of Public Services rendered by Amount transferred to Amount spent by the Achievements of the Entity the public entity the public entity public entity public entity None - - - -

5.2 Transfer payments to all organisations other than public entities

The table below reflects the transfer payments made for the period 1 April 2014 to 31 March 2015

Name of Type of Purpose for Did the dept. Amount Amount Reasons transferee organisation which the funds comply with s transferred spent by for the were used 38 (1) (j) of the (R’000) the entity funds PFMA unspent by the entity None ------

The table below reflects the transfer payments which were budgeted for in the period 1 April 2014 to 31 March 2015, but no transfer payments were made.

Name of transferee Purpose for which Amount Amount Reasons why funds were not the funds were to budgeted for transferred transferred be used (R’000) (R’000) None - - - -

6. CONDITIONAL GRANTS

6.1 Conditional grants and earmarked funds paid The conditional grants and ear marked funds paid during for the period 1 April 2014 to 31 March 2015.

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None Department who transferred the grant

N/A Purpose of the grant

N/A Expected outputs of the grant

N/A Actual outputs achieved

N/A Amount per amended DORA

N/A Amount received (R‟000)

Reasons if amount as per DORA was not N/A received N/A Amount spent by the department (R‟000)

N/A Reasons for the funds unspent by the entity

N/A Reasons for deviations on performance

N/A Measures taken to improve performance

Monitoring mechanism by the receiving N/A department (NB. The next paragraph makes provision for the paid funds.)

6.2 Conditional grants and earmarked funds received

The table below details the conditional grants and ear marked funds received during for the period 1 April 2014 to 31 March 2015.

Human Settlements Development Grant Department who transferred the grant ( Schedule 5, Part A) To provide funding for the creation of sustainable human settlements Purpose of the grant

No. of residential units delivered in each housing programme. No of serviced sites delivered in each housing programme No. of finance linked subsidies approved & disbursed Expected outputs of the grant No. of households in informal settlements provided with household access to services.

N/A Actual outputs achieved

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Matjhabeng R26.8 million Amount per amended DORA Moqhaka R5.2 million R1 078 642 000 Amount received (R’000)

Reasons if amount as per DORA was N/A not received Amount spent by the department R1 063 756 000 (R‟000) Reasons for the funds unspent by the N/A entity N/A Reasons for deviations on performance

N/A Measures taken to improve performance

Monitoring mechanism by the receiving Monthly and quarterly monitoring of expenditure against the set targets. department

7 DONOR FUNDS

7.1. Donor Funds Received The department received no donor funds.

8 CAPITAL INVESTMENT

8.1. Capital investment, maintenance and asset management plan The department does not have capital investments maintenance and asset management plan.

The table below indicates expenditure on new and replacement assets. New and 2014/2015 2013/2014 replacement Assets Final Actual (Over)/Under Final Actual (Over)/Under Appropriation Expenditure Expenditure Appropriation Expenditure Expenditure R’000 R’000 R’000 R’000 R’000 R’000 Audio video 8,000 7,599.00 401.00 - - - equipment Construction and 494,000.00 493,700.00 300.00 - - - main equipment Office equipment 435,000.00 250,354.84 184,645.16 269,000.00 217,310.37 51,689.63 Office furniture 414,000.00 374,906.37 39,093.63 431,000.00 - 431,000.00

Computer hardware 242,000.00 176,003.99 65,996.01 48,000.00 16,316.00 31,684.00 &sys- desktop Computer hardware 771,000.00 606,830.48 164,169.52 479,000.00 338,121.14 140,878.86 & sys- laptop Computer hardware 40,000.00 38,597.92 1,402.08 102,000.00 27,038.00 74,962.00 & sys - tablet Finance leases 933,000.00 804,412.31 128,587.69 796,000.00 780,364.28 15,635.72 other machinery

TOTAL 3,337,000.00 2,752,404.71 584,595.29 2,125,000.00 1 379 745,850.21

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PART C: GOVERNANCE

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1 INTRODUCTION

The following structures were operstional within the department during the year under review towards ensuring that the department maintains the highest standards of governance, thereby effectively utilizing the department‟s resources.

2 RISK MANAGEMENT The department has a risk management strategy that guides the implementation of the risk management policy. It includes the plan of action on how the department intends to improve the maturity of risk management. The risk management policy communicates the department‟s risk management philosophy on how risk management is expected to support the department in achieving its objectives. It also has a process of identifying new and emerging risks once every quarter. The department has and maintains a Risk management committee that is appointed by the Accounting Officer as per the requirement by the Public Sector Risk Management Framework. The audit committee provides an independent and objective assurance on the effectiveness of risk management in the department. In executing its responsibilities as set out in the risk management strategy, management included risk management as a standing item on the agenda of the senior management meetings.

3 FRAUD AND CORRUPTION The Security Management and Anti-Corruption Directorate (SMAC) have developed a Departmental Fraud Prevention Plan. The plan will be reviewed annually to ensure its relevance and effectiveness. The review process will include amongst others an Effectiveness Survey which will be conducted in the 2015/2016 financial year involving governance components and other role players.

A Minimum Anti-Corruption Capacity Requirements Implementation Plan is in the development stage and the draft will be circulated for consultation to all departmental role players in the 2015/2016 Financial Year.

Whistle blowing is one of the mechanisms in place to report fraud and corruption. The Whistleblowing Policy is included in the Fraud Prevention Plan and the employees are continuously made aware of it through the departmentally arranged awareness sessions. The effectiveness of this mechanism will also be tested during the annual Effectiveness Survey.

The Security Manager reports on a monthly basis to the Head of Department on the status of all cases. Recommendations on the management of the SMAC Case Management System that was put forward by the Combined Audit Committee, was implemented in this financial year.

In the 2015/2016 financial year, the monthly reports- including nil reports- will be submitted to the Public Service Commission in relation to cases referred to the department by the National Anti-Corruption Hotline.

4 MINIMISING CONFLICT OF INTEREST As prescribed by chapter three of the Public Service Act, 1994 (Act No. 103 of 1994), read with related regulations regarding financial disclosures, All Senior Management Members (SMS) except six (6) SMS who are on suspension have completed the disclosure forms and these were signed off by the Executive Authority. The department have consulted the State Law Advisors as well as the legal representatives of these officials regarding their compliance with the prescripts.

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These disclosures formed the basis to minimize conflict of interest. These reports were presented to the office of Public Service Commission as required by the Act.

5 CODE OF CONDUCT In order to give practical effect to the relevant constitutional provisions relating to the public service, all employees are expected to comply with the Code of Conduct provided for in Chapter two (2) of the Public Service Regulations.

The Code act as a guideline to employees as to what is expected of them from an ethical point of view, both in their individual conduct and in their relationship with others. Compliance with the Code can be expected to enhance professionalism and help to ensure confidence in the public service.

The need exists to provide direction to employees with regard to their relationship with the legislature, political and executive office-bearers, other employees and the public and to indicate the spirit in which employees should perform their duties, what should be done to avoid conflicts of interests and what is expected of them in terms of their personal conduct in public and private life.

Although the Code of Conduct was drafted to be as comprehensive as possible, it is not an exhaustive set of rules regulating standards of conduct in the Department. However, our Head of Department Mr N Mokhesi, by virtue of his responsibility in terms of section 7(3)(b) of the Public Service Act which deals with efficient management and administration and the maintenance of discipline, is, inter alia, under a duty to ensure that the conduct of all employees conform to the basic values and principles governing public administration and the norms and standards prescribed by the Act.

The HOD also has a duty to ensure that all employees are acquainted with these measures, and that they accept and abide by them. In order to achieve this, our Human Resources Management and Development Directorate is tasks through the APP of the Department to arrange Information Sessions where the Code of Conduct is unpacked or presented to officials. Officials are also furnished with copies of same where upon they complete a questionnaire confirming that such training took place.

The primary purpose of the Code is a positive one, viz. to promote exemplary conduct. Notwithstanding this, an employee shall be guilty of misconduct, and may be dealt with in accordance with the relevant collective agreement if she or he contravenes any provision of the Code of Conduct or fails to comply with any provision thereof.

6 HEALTH, SAFETY AND ENVIRONMENTAL ISSUES The split of the department compounded the challenge of office space, however, the department continues to engage the Department of Public Works and Infrastructure in addressing the issue in question. The shortage of offices leads to a situation whereby two or three officials share an office without proper cabling and expose them to hazardous conditions. The departmental policies on Employee Health and Wellness and their operational plans have been approved and are aimed at promoting the employees‟ health and safety.

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7 PORTFOLIO COMMITTEES The department attended the following Portfolio Committee meetings:

Date Matters discussed

12 August 2014 Consideration of the Annual Performance Plan

20 August 2014 Consideration of the 1st Quarter Report (Non-Financial)

6 November 2014 Consideration of the 2nd Quarter Report (Non-Financial) and 2013/2014 Annual Report

06 March 2015 Consideration of the 3rd Quarter Report (Non-Financial)

8 PROPAC RESOLUTIONS Resolution Subject Details Response by the Resolved No. department (Yes/No) Resolution 2 of Housing Fund 2008 The department must: Additional 24 properties were Application forms No  Prepare an transferred in 2014 and 84 is distributed to the action plan currently in various stages of beneficiaries and to with time being transferred. Most suspense complete. Some frames on the accounts have been cleared and applications already closing of the the department is awaiting the lodged with the State housing fund National Department of Human Attorney. Settlements to pass the new  Report on the Housing Act to allow departments progress with to close the fund. the integration of housing into the department

Resolution 2 of Capacity 2010 Ensure that the In terms of the support function Vacancies filled to date: No financial section related to the department no of the additional funds were received FIVE posts Still vacant and department is from Provincial Treasury until advertised; sufficiently the end of the 2012/13 financial - Dir – Finance capacitated by year. Funds were only made - DD – Finance skilled officials available from 1 April 2013 to - PA – Director to ensure that start the process although the Interviews have been financial additional allocation is in the conducted for the Director Finance. Posts functions are case of both departments not were advertised. properly enough for the most critical Currently in the process executed. functions in the Support of short-listing suitable Service Directorates. Provincial candidates Treasury also only made Compensation of Employee funds available, but no funds

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Resolution Subject Details Response by the Resolved No. department (Yes/No) for operation matters, resulting the possible filling of some of the critical posts, but not having tools of the trade for those officials to effectively function.

Levels 13 and up were already split and the department is in the process to split levels 1 to 12 after which the most critical posts will be advertised for filling as from April 2013.

Declaration of interest:

Implement

control Declarations of all Senior Systems were Managers were done implemented. All Senior Yes measures to ensure that all Managers submitted employees declare their own spouses‟ and other close relatives‟ interests in companies or closed corporations tendering, providing quotation or doing business with departments.

Resolution Advance Reconcile amounts and claims Summonses have been No 2/2012 Payments to unspent funds back issued against all contractors suppliers, they have

filed notices of intention Department made advance to defend and the payments to department is contractors responding accordingly. contrary to laws and regulations.

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9 PRIOR MODIFICATIONS TO AUDIT REPORTS

The Department appointed the consultants Ernest and Young in order to enhance the capacity challenges within the Chief Directorate: Financial and Supply Management and part of their extended mandate included the following:

 Policy development and/or review across the department,  Maintenance of the Irregular, Fruitless and Wasteful Expenditure Registers and the investigations thereof,  HSS/BAS reconciliations,  the development of the Action Plans based on the AGSA Audit Reports and Management Letter, population thereof and periodically reporting on the progress to Provincial Treasury and Internal Audit Directorate for evaluation purposes,  Monthly reporting progress to Provincial Treasury on behalf of the Department on the Key Control Matrix. These reports were signed off by the Accounting Officer.

The Department further continued with the Audit Steering Committee meetings which were held bi-weekly in order to assess progress on the implementation of AGSA‟s recommendation. The minutes of these meetings are maintained and the feedback reports presented to the Accounting Officer.

The AGSA‟s Action Plans is a standing item in the agenda of the Shared Audit Committee and progress on the implementation status quo is tabled at these meetings.

Nature of qualification, disclaimer, adverse opinion Financial year in which Progress made in clearing / resolving the and matters of non-compliance it first arose matter N/A

10 INTERNAL CONTROL UNIT

The Department appointed Consultants to assist with the functions of the Internal Control Unit during the year under review due to human skills and capacity constraints. The functions the Department was assisted with were as follows:

 Checking and verification of all transactions related to payments to Suppliers and Contractors and payments to officials;  Checking and verification of all transactions that was made via journal entries on the system;  Safeguarding of all relevant supporting documentation;  Evaluating payments to update and maintain the registers related to the following: o Irregular Expenditure; o Fruitless and Waste full Expenditure; and o Unauthorised expenditure

The officials from the Consultancy Firm and officials from the Internal Control unit are working together to ensure that the necessary skills are transferred.

11 INTERNAL AUDIT AND AUDIT COMMITTEES

The objective of Human Settlement‟s Internal Audit Activity (Activity) is encapsulated in the definition of Internal Auditing which is to provide an independent, objective assurance and consulting service designed to add value and improve the Departments‟ operations. It helps the Department to accomplish its objectives by bringing a

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PART C GOVERNANCE systematic, disciplined approach to evaluate and improve the effectiveness of risk management, internal control and governance.

In terms of the scope of work of this Activity, a duly appointed Shared Audit Committee approved the Annual and Three Year Risk Based Internal Audit Coverage Plan. The plan focused primarily on statutory audits, audits related to EXCO Resolutions, Audit Reports and Management Letter received from Auditor-General South Africa for 2012/13 financial year, Ad-hoc Assignments, follow-up audits as well as financial audits.

The Activity reported progress against the approved Plan on quarterly basis to the Shared Audit Committee.

The Shared Audit Committee was established and functions in terms of Treasury Regulations, 2005(TR) 3.1.1 to 3.1.16 which came into effect as a result of section 76 as well as section 77 of the Public Finance Management Act, 1999 (Act No. 1 of 1999).

The Shared Audit Committee was appointed by the Member of Executive Council: Free State Provincial Treasury in consultation with Member of Executive Council: Cooperative Governance, Traditional Affairs and Human Settlements, for a period of three years, with effect from 01 October 2014.

During the period under review, the Shared Audit Committee fulfilled its mandate, roles and responsibility as elaborated under paragraph 12 below.

If internal, No. of Internal or position in Date Date Name Qualifications Meetings external the appointed Resigned attended department

Mr David B.Com Ref to Lekoto B.Com (Hons-Part 1) 01 October Diploma in Certified External N/A N/A paragraph 12 2014 Fraud Examiners below Certified Public Account (SA), GIA Dr C Olivier N. Dip in Public Administration B. Luris Public Service 01 October Masters in Public External N/A N/A Administration 2014 Ph. D in Public Management

Mr. I Mokoena Diploma Industrial Engineering Project Management 01 October Management External N/A N/A Advancement 2014 Programme MBA

Dr. K B. Com B. Com (Hons) Laubscher 01 October Masters of Science External N/A N/A Ph. D Agricultural 2014 Economics

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Adv. J Block Baccalaureus Legum Baccalaureus Lurisprudentiae Diploma in Tax Law 01 October Certificate Public External N/A N/A Finance Management 2014 Certificate Procurement Management

12 AUDIT COMMITTEE REPORT

SHARED AUDIT COMMITTEE REPORT The Shared Audit Committee of the Department of Human Settlements is pleased to present its report for the financial year ended 31 March 2015.

Background Information

The Shared Audit Committee has non-executive status in an advisory capacity to the Accounting Officer and Member of the Executive Council, to assist the Accounting Officer in fulfilling its oversight responsibility relating to:

(i) The integrity of the Department’s financial statements and financial reporting process; (ii) System of internal control, risk management and governance processes; (iii) The audit processes both internal and external; and (iv) The Department’s process for monitoring compliance with laws, regulations and the code of conduct.

In discharging its responsibilities, the Shared Audit Committee is not itself responsible for the planning or conducting of audits or for any determination that the financial statements of the Department are complete and accurate or in accordance with generally recognised accounting procedures and standards. This is the responsibility of management and the independent auditors. The Committee‟s role is that of an independent monitoring and evaluation of activities within the Department.

The term of office of the then Shared Audit Committee expired in August 2014.

Shared Audit Committee Members and Attendance

The Shared Audit Committee consists of the members listed hereunder and should meet at least four (4) times per annum as per its approved Audit Committee Charter. Further, special meetings are arranged as and when necessary in order to address urgent matters.

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During the year under review four (4) meetings were held as reflected in the table below.

Name Capacit Normal Meeting Special Meeting Special Normal Meeting y 30 April 2014 28 May 2014 Meeting 06 February 2015 28 July 2014 Ms M M Nkomo Chairperson ≠ * * # Mr D Lekoto Chairperson £ * * # Mr G S Majola Member * * * * Mr R I Mokoena Member * * * * Dr C D Olivier Member * * * * Adv D Block Member * * * * Dr K Laubscher Member * * * *

Legend: Ms M M Nkomo is the former Chairperson of the committee and her term of office expired in August 2014 * - Attended the meeting £ - Mr D Lekoto is the new Chairperson and was only appointed in September 2014 ≠ - Apology # - did not attend because they are former members of the Committee

Notwithstanding the fact that the current Shared Audit Committee was appointed and constituted late into the new financial year, it progressed with its oversight responsibilities. The performance of the committee was therefore not compromised due to the late appointment.

Shared Audit Committee Responsibility

The Shared Audit Committee reports that it has complied with its roles and responsibilities arising from Section 38(1)(a) of the Public Finance Management Act and Treasury Regulation 3.1.1 to 3.1.16 with regards to its establishment and Terms of Reference.

S38(1)(a) S38(1)(a)(ii) of the PFMA state the following:

(PFMA) (1) “The accounting officer for a department,

(a) must ensure that department,…. has and maintains-

(ii) a system of internal audit under the control and direction of an audit committee complying with and operating in accordance with regulations and instructions prescribed in terms of sections 76 and 77”

The purpose of the Shared Audit Committee is to:

 assist management in discharging its duties relating to the safeguarding of assets, the operation of adequate systems, control and reporting processes, and the preparation of accurate reporting and financial statements in compliance with the applicable legal requirements and accounting standards;

 oversee the activities of, and to ensure coordination between, the activities of internal and external audit;

 provide a forum for discussing financial, enterprise-wide, market, regulatory, safety and other risks and control issues; and to monitor controls designed to minimize these risks;

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 review the department‟s annual integrated report, including the consolidated and separate annual financial statements, as well as its interim report and any other public reports or announcements containing financial information;

 receive and deal with any complaints concerning the accounting practices, internal and external audit or the content and audit of its financial statements or related matters; and

 annually review the committee‟s work and charter to make recommendations to the board to ensure its effectiveness.

Duties carried out

The Shared Audit Committee has performed its duties and responsibilities during the financial year according to its Charter.

The Shared Audit Committee also reports that during the financial year under review it has reviewed and adopted appropriately:

 The Revised Audit Committee Charter,

 Revised Internal Audit Charter,

 Revised Internal Audit Coverage Plan for the period,

 Revised Internal Audit Manual,

 A report on the Performance against the approved Internal Audit Coverage Plan,

 A report on the progress on the implementation of recommendation by the Auditor-General South Africa,

 Key Control Matrix and Dash Board Reports, and

 Risk Management and Risk Management Committee Reports.

The Effectiveness of Internal Control

During the year under review, several instances of non-compliance were reported by the Internal Audit Directorate that resulted in a breakdown in the functioning of internal controls. Further, the systems of internal controls were not entirely effective for the year under review, as compliance with prescribed policies and procedures were lacking in certain instances.

During the year under review, the Department has put much emphasis on improving internal controls and adherence to policies and procedures. The Shared Audit Committee is thus content to report that management‟s efforts in this regard have led to an increased level of compliance to internal controls, policies and procedures. Not taking away that there are still areas of concern where the state and status of internal controls can be enhanced.

The Internal Audit Directorate presented the Activity Reports during the above-mentioned sittings of the Shared Audit Committee, the reports of which included performance against the approved internal Audit coverage plan with all supporting documents, which highlighted the shortcomings as outlined in the above-mentioned paragraph.

The Shared Audit Committee is pleased to report that, whilst the objectives of the Internal Audit Directorate and the Auditor-General South Africa (AGSA) are different, the AGSA, determined that, based on their assessment

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PART C GOVERNANCE of the scope of specific work performed, the objectivity and technical competence of the Internal Audit Directorate, and whether the work is carried out with due care, the procedures performed on the Comparative Figures on the Draft 2014/15 Annual Financial Statement prior to submission to AGSA will be taken into consideration in the performance of the external audit work.

Further other work performed by the Internal Audit Directorate has been used to assess risk and internal control deficiencies that may impact on the audit process. All the reports issued had thus been distributed to Auditor- General South Africa for that purpose.

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

The Shared Audit Committee noted all in year management and quarterly reports submitted in terms of the PFMA and the Division of Revenue Act to Provincial Treasury. These reports were presented at each Shared Audit Committee meetings as per the schedule above.

Predetermined Objectives

The Shared Audit Committee noted the presentations done on Predetermined Objectives and the progress on the achievement thereof by the Departmental Planning and Performance Monitoring Directorate during the course of the financial year.

The Shared Audit Committee noted with concern that adequate and reliable corroborating evidence could not be provided for 50% and 29% of the targets related to Programme 2: Housing Needs, Research and Planning and Programme 3: Housing Development respectively in order to assess the reliability of the reported performance information.

The Shared Audit Committee thus request management to develop realistic and achievable targets and monitor on regular basis the performance against these targets as well as the quality of the reports for consideration by the Shared Audit Committee.

Review and Evaluation of Interim Financial Statements

The Shared Audit Committee noted the quarterly reviews performed by the Internal Audit Directorate on the Interim Financial Statements. These reports were included in the Internal Audit Activity Reports which were presented at each sitting of the Shared Audit Committee.

Review and Evaluation of Annual Financial Statements

The Shared Audit Committee has:

 Reviewed and discussed the unaudited/audited annual financial statements to be included in the annual report with the Accounting Officer‟s Report,

 Reviewed progress on Auditor-General South Africa‟s management report and management responses thereto for the 2014/2015 financial year and the effect of which to the current audit,

 Reviewed changes in accounting policies and practices,

 Reviewed the department‟s compliance with legal and regulatory provisions,

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

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 Reviewed significant adjustments resulting from the audit,

 Reviewed the Auditor-General‟s Management Letter and responses thereof of the 2014/15 financial year

The Shared Audit Committee concurs and accepts the conclusion of Auditor-General South Africa on the annual financial statement which resulted in the qualified audit opinion, and is of the view that the audited financial statements be accepted and read together with the report of Auditor-General South Africa. The acceptance also apply to the audited financial statement of the Housing Fund,

The Shared Audit Committee is concerned with reoccurrence of the issues raised during the audited financial statements for the 2013/14 financial year.

Notwithstanding the above-mentioned, despite an assurance that the appointed consultants will assist in addressing prior year issues, the Shared audit Committee is concerned that the Department has not improved in light of the number of the qualification paragraphs as well as a number of internal control weaknesses raised in the management letter.

The committee had requested management to develop action plans to address all those identified deficiencies and in particular recurring findings, and this plan will be co-signed between the Shared Audit Committee and Management.

The Internal Audit Directorate will monitor the implementation status quo and report periodically to the Shared Audit Committee.

Internal Audit Directorate

The Shared Audit Committee is satisfied that the Internal Audit Directorate is operating effectively and that in all the reports perused and approved it has addressed the risks pertinent to the department in its audits.

The Shared Audit Committee reviewed and approved the annual internal audit plans and evaluated the independence, effectiveness and performance of the internal audit function;

The Shared Audit Committee expressed its appreciation on the compilation of the three year and annual internal audit coverage plans because it is based on the outcome of the risk assessment thus making it a risk based Internal Audit Coverage Plan which is in compliance with the Standards of Professional Practice of Internal Auditing.

The Shared Audit Committee considered the reports of the internal auditors regarding systems of internal control including financial controls, business risk management and maintenance of effective internal control systems;

The Shared Audit Committee reviewed issues raised by Internal Audit Directorate and the adequacy of corrective action taken by management in response thereto. The Shared Committee concluded that there were no material breakdowns in internal control and in instance were such existed, considered and assessed the adequacy of the corrective action taken and progress implementation status quo and found it satisfactory;

The Shared Audit Committee is also pleased that Auditor-General South Africa used some of the work performed by the Internal Audit in expressing an audit opinion thereby alleviating duplication of efforts.

The Shared Audit Committee concerns were reported and escalated to the accounting officer in their quarterly reports during the financial year.

It should also be noted that it remains the ultimate goal of the Shared Audit Committee to see a shift in the reduction of external audit hours as a result of the synergy between the External Audit and Internal Audit Strategies as more reliance is placed on the work of Internal Audit.

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Risk Management

The Department‟s risk maturity is at a basic level. However, there is a Risk Management Committee that meets on a regular basis and periodically reports to the Audit Committee.

The Shared Audit Committee had on numerous occasions raised concerns regarding the non-completion/finalization of the risk assessment process within the department and how it negatively impacts on the Internal Audit activities, in particular the compilation of the risk based Internal Audit Coverage Plan.

Further, the Committee is concerned regarding challenges experienced by the Risk Management Sub-Directorate which amongst others includes capacity constraints experienced within the Sub-Directorate and non-availability of key officials during the risk assessment process.

The Committee requested management to develop mechanisms to address these challenges and ensure that the risk management sub-Directorate performs efficiently.

Notwithstanding the above-mentioned, the Shared Audit Committee is pleased with the progress made to this end in the Sub-Directorate.

Other matters of emphasis

Notwithstanding the above-mentioned, the Shared Audit Committee is pleased to have noticed the following:-

 The Shared Audit Committee have made inputs which were significantly invaluable to the Head of Department and Management and laid solid foundation for risk management, governance processes and Internal control systems;

 The Shared Audit Committee have managed to assist both the Head of Department and Management to get financial policies and procedures finalized and approved as well as noted that the Department had addressed capacity challenges in Senior Management positions

 The Shared Audit Committee have managed to assist management to be accountable and engage the Auditor-General South Africa in the way they are supposed to which is in line with PFMA, and

 The Shared Audit Committee's presence has instilled management's resilience and surpasses their mandate.

The Shared Audit Committee that with this basis, or foundation built, it will deliver an "Unqualified Audit Opinion" Report by the Auditor –General South Africa 2015/16.

Auditor-General South Africa

The Shared Audit Committee is satisfied that there is a cordial relationship between the Auditor- General South Africa and the Department due to the following:

 Approved the external audit engagement letter, the audit strategy and implementation plan and the budgeted audit fees payable to Auditor- General South Africa,

 The Shared Audit Committee met with the Auditor-General South Africa to ensure that there is no unresolved issues,

 The Auditor-General South Africa met periodically with management to discuss the progress on the implementation of the recommendations in the management reports,

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 Obtained assurances from Auditor-General South Africa that adequate accounting records were being maintained

 The Auditor-General South Africa attendance of the Shared Audit Committee meetings as well as their participation in the shared audit committee meetings during the audit of the annual financial statements,

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PART D: HUMAN RESOURCE MANAGEMENT

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1. INTRODUCTION

The human resource management and Development directorate of the department of Human Settlements is made up of the following: personnel provisioning and Utilization, Employee Health and Wellness, Labour relations and human resource development.

2. OVERVIEW OF HUMAN RESOURCES

 The status of human resources in the department.

The department as a whole has been faced with chronic staff shortage and budget limitations. This is mostly felt in technical as well as in project management, while we continue to ensure that we understand and support the lines of business we serve, we do not always get cooperation when it comes to the planning and management of human resources in the Department.

 Human resource priorities for the year under review and the impact of these.

Filling of critical vacancies with skilled staff to address the skills gap (especially in technical services and finance)

Retention of key and scarce skills and competencies in the department Alignment of the structure to the strategic objectives of the department (including Job Evaluation of all posts) Conduct a skills audit to determine and align the available skills and to enable the department to plan for its future needs. Increased delegation of authority in terms of the Public Service Act and Regulations

 Workforce planning and key strategies to attract and recruit a skilled and capable workforce.

The department has an approved recruitment and selection policy as well as an HR plan which is used as a basis for workforce planning. Employee workforce analysis is done and submitted to all managers to assist in their plans and contribution towards the achievement of equity targets. As a strategy to retain skilled and capable workforce the department considers the reward system of PDMS, though it is not enough as the public service is not able to compete with salary structures offered by the private Sector, and even municipalities.

To attract suitable skills the department participates in the Human Settlements Scholarship which is aimed at provincial students studying towards scarce skills needed in the department. Budgetary constraints as well as the scarcity of professionals meeting the requirement of the professional bodies makes it difficult to place the students and to retain them once they have been employed.

Training to address development areas training is provided for under the skills development levy and it is mandatory that such training be relevant to the department as well as the functions performed by the official.

Employee Performance Management

The Public Service Regulations, Chapter 1, Part VIII 2001, B.1 requires from an executing authority to determine a system for performance management and development for jobholders, other than Senior Management Service

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Members, in her/his department. In line with that the Free State Provincial Government approved a policy framework on PDMS for levels 1-12. The Department of Human Settlements has implemented the PDMS in line with this Framework.

Performance and Development Plans for official at levels 1-12 for the performance year 2013/2014 were completed by all the officials. The process of performance assessment was finalised by October 2014. Out of 240 employees, only 148 employees received cash bonuses.

Challenges experienced by the Department in completing the PDEMS assessment process within the timeframe were that there were human resource capacity constraints. However the Department has employed another official to increase the capacity of the Unit.

Chapter 4, Part III of the Public Service Regulation (PSR), 2001, read with Chapter 4 of the SMS Handbook provides prescripts on PMDS for SMS members which determines that: the performance of SMS members must be managed in accordance with Performance Agreements (PAs) and must be linked to the department's strategic goals and must comply with the prescribed criteria.

In terms of DPSA Handbook for SMS Performance Management, SMS Managers including the Head of the Department are required to have signed Performance agreements by the end of May every year, and for newly appointed SMS, three months after the appointment of the official. For the period 2014/2015, due to the extension period provided as the result of the election process out of 21 SMS members including the HOD, 14 completed performance agreements, six officials were on suspension and one was appointed after the period of submission.

Performance assessment for the SMS in the Department was concluded in December 2014. Out of 21 SMS members, 11 benefitted in terms of receiving cash bonuses, 6 were still on suspension, three were less than twelve months in the positions. HOD‟s verification report was also completed and submitted to the relevant authorities, however, was not awarded a performance bonus.

Source documents used were: Free State Provincial Government Policy Framework on PDMS from level 1-12 and SMS Handbook on performance management

Employee Wellness Programmes

The department has a functional employee health and wellness programme, with all the four policies as well as operational plans approved and implemented. These have been presented to the highest structure in the department (SMS meeting) and road shows have been held as a means of bringing awareness to the officials of the department. The programme is currently faced with a serious challenge of human resources as well as a dedicated budget to enable it to carry out its mandate.

 Highlight achievements and challenges faced by the department, as well as future human resource source plans /goals.  The department has managed to reduce the number of vacancies which have been vacant for more than 12 months. Though resources and accommodation become a serious challenge once the officials assume duties. 

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3. HUMAN RESOURCES OVERSIGHT STATISTICS

3.1. Personnel related expenditure

Table 3.1.1 Personnel expenditure by programme for the period 1 April 2014 to 31 March 2015 Programme Total Personnel Training Professional Personnel Average expenditure expenditure expenditure and special expenditure personnel (R’000) (R’000) (R’000) services as a % of cost per expenditure total employee (R’000) expenditure (R’000)

1. Administration: 0 Programme 1 77 314 48 677 428 62.96% 302.34 2 Housing needs, 0 research and planning: Programme 2 17 607 12 545 0 71.25% 392.03 3. Housing development: 1 111 861 46 039 0 3 968 079 4.14% 438.47 Programme 3 4. Housing assets 0 management: Programme 4 770 511 0 66.36% 255.50

Total 1 207 552 107 772 428 3 968 079 8.92% 359.24

Table 3.1.2 Personnel costs by salary band for the period 1 April 2014 to 31 March 2015

Salary band Personnel % of total No. of Average personnel cost expenditure personnel employees per employee (R’000) (R’000) cost 0 0 0 0 Lower skilled (Levels 1-2) 11 834 10.98 50 236.68 Skilled (Levels 3-5) 33 871 31.43 140 241.94 Highly skilled production (Levels 6-8) 31 581 29.30 72 438.63 Highly skilled supervision (Levels 9-12)

Senior management 20 500 19.02 18 1 138.89 (Levels 13-16) 0 Periodic remuneration 424 0.39 3 141.33 Contract 3-5 1 814 1.68 3 604.67 6-8 7 266 6.74 13 558.92 9-12 482 0.45 1 482 13-16 107 772 100 300 359.24 Total

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Table 3.1.3 Salaries, Overtime, Home Owners Allowance and Medical Aid by programme for the period 1 April 2014 to 31 March 2015

Salaries Overtime Home Owners Medical Aid Allowance Programme Amount Salaries Amount Overtime Amount HOA as a Amount Medical aid as (R’000 as a % of (R’000) as a % of (R’000) % of (R’000) a % of personnel personnel personnel personnel costs costs costs costs 1. Administration: 36753 74.6 130 0.3 1313 2.7 1853 3.8 Programme 1 2 Housing needs, research & planning: 427 71.4 0 0 19 3.2 19 3.2 Programme 2 3. Housing development: 35582 73.4 376 0.8 1432 3 1790 3.7 Programme 3 4. Housing assets management: 9507 73.5 45 0.3 252 1.9 282 2.2 Programme 4 TOTAL 82269 73.9 551 0.5 3016 2.7 3944 3.5

Table 3.1.4 Salaries, Overtime, Home Owners Allowance and Medical Aid by salary band for the period 1 April 2014 to 31 March 2015 Salaries Overtime Home Owners Medical Aid Salary band Allowance Amount Salaries Amount Overtime Amount HOA as a Amount Medical aid as a (R’000 as a % of (R’000) as a % of (R’000) % of (R’000) % of personnel personnel personnel personnel costs costs costs costs Skilled (Levels 0 0 0 0 0 0 0 0 1-2) Skilled (Levels 3-5) 6119 68.1 105 1.2 460 5.1 760 8.5 Highly skilled production (Levels 6-8) 25478 69.1 355 1 1319 3.6 2106 5.7 Highly skilled supervision (Levels 9-12) 25548 73 92 0.3 586 1.7 860 2.5 Senior Management (Levels 13-16) 15137 76.5 0 0 652 3.3 218 1.1 Contract (Levels 3-5) 424 100 0 0 0 0 0 0 Contract(Levels 6-8) 1814 99.9 0 0 0 0 0 0 Contract (Levels 9-12) 7266 92.7 0 0 0 0 0 0 Contract (Levels 13-16) 482 95.1 0 0 0 0 0 0 TOTAL 82268 73.9 552 0.5 3017 2.7 3944 3.5

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3.2. Employment and Vacancies

Table 3.2.1 Employment and vacancies by programme as on 31 March 2015

Programme Number of Number of Vacancy Number of employees posts on posts filled Rate additional to the establishment approved establishment 1.Adminstration: Programme 1 257 128 50.19% 0 2 Housing Needs Research and 75 33 56% 0 Planning: Programme 2 3. Housing Development 201 83 53.73% 15 Programme 3 4. Housing Assets Management 88 49 44.3% 0 Programme 4 Total 621 293 52.82% 15

Table 3.2.2 Employment and vacancies by salary band as on 31 March 2015

Salary band Number of Number of Vacancy Rate Number of employees additional posts on posts filled to the establishment approved establishment Lower skilled (Levels1-2) 0 0 0% 0 Skilled(Levels 3-5) 63 49 22.2% 0 Highly skilled production 145 130 10.3% 3 (Levels 6-8) Highly skilled supervision 80 70 12.5% 13 (Levels 9-12) Senior management (Levels 27 19 30% 1 13-16) Total 315 268 15% 17

Table 3.2.3 Employment and vacancies by critical occupations as on 31 March 2015

Critical occupation Number of Number of Vacancy Number of employees posts on posts filled Rate additional to the approved establishment establishment Technical/Engineering Related Advisory 32 15 62.5% 0 Services 08 2.66% 08 (contracts) TOTAL 32 15 65.5% 8

3.3. Filling of SMS Posts

The tables in this section provide information on employment and vacancies as it relates to members of the Senior Management Service by salary level. It also provides information on advertising and filling of SMS posts, reasons for not complying with prescribed timeframes and disciplinary steps taken.

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Table 3.3.1 SMS post information as on 31 March 2015

SMS Level Total Total % of SMS Total number of % of SMS posts vacant number of number of posts filled SMS posts vacant funded SMS posts SMS posts filled Director-General/ Head of 1 1 100% 0 0% Department Salary Level 15 1 1 100% 0 0% Salary Level 14 5 5 100% 0 0% Salary Level 13 20 12 60% 8 40% Total 27 19 70% 8 30%

Table 3.3.2 SMS post information as on 30 September 2014

Table 3.3.3 Advertising and filling of SMS posts for the period 1 April 2014 to 31 March 2015

SMS Level Advertising Filling of Posts

Number of vacancies per Number of vacancies Number of vacancies per level not level advertised in 6 per level filled in 6 filled in 6 months but filled within months of becoming months of becoming 12 months vacant vacant Director-General/ Head of 1 0 0 Department Salary Level 15 0 0 0

Salary Level 14 0 0 0

Salary Level 13 5 0 5

Total 6 0 5

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Table 3.3.4 Reasons for not having complied with the filling of funded vacant SMS - Advertised within 6 months and filled within 12 months after becoming vacant for the period 1 April 2014 to 31 March 2015

Reasons for vacancies not advertised within six months

 Insufficient budget  Accommodation and resource shortage challenges

Reasons for vacancies not filled within twelve months  Insufficient budget  Accommodation and resource shortage challenges

Table 3.3.5 Disciplinary steps taken for not complying with the prescribed timeframes for filling SMS posts within 12 months for the period 1 April 2014 to 31 March 2015

No disciplinary steps taken

Reasons for vacancies not advertised within six months  Insufficient budget  Accommodation and resource shortage challenges

Reasons for vacancies not filled within six months  Insufficient budget  Accommodation and resource shortage challenges

3.4. Job Evaluation

Table 3.4.1 Job Evaluation by Salary band for the period 1 April 2014 to 31 March 2015

Salary band Number of Number of % of posts Posts Upgraded Posts downgraded posts on Jobs evaluated Number % of Number % of approved Evaluated by salary posts posts establishment bands evaluated evaluated Lower Skilled 0 0 0 0 0 0 0 (Levels1-2) Skilled (Levels 3-5) 63 2 3% 2 3% 0 0 Highly skilled 145 1 1% 1 1% 0 0 production (Levels 6- 8) Highly skilled 80 2 3% 2 3% 0 0 supervision (Levels 9-12) Senior Management 20 0 0 0 0 0 0 Service Band A Senior Management 5 0 0 0 0 0 0 Service Band B Senior Management 1 0 0 0 0 0 0 Service Band C Senior Management 1 0 0 0 0 0 0 Service Band D Total 315 5 2% 5 2% 0 0%

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The following table provides a summary of the number of employees whose positions were upgraded due to their post being upgraded. The number of employees might differ from the number of posts upgraded since not all employees are automatically absorbed into the new posts and some of the posts upgraded could also be vacant.

Table 3.4.2 Profile of employees whose positions were upgraded due to their posts being upgraded for the period 1 April 2014 to 31 March 2015

Gender African Asian Coloured White Total Female 1 0 0 0 1 Male 2 0 0 1 3 Total 3 0 0 1 4

Employees with a disability 0

The following table summarises the number of cases where remuneration bands exceeded the grade determined by job evaluation. Reasons for the deviation are provided in each case.

Table 3.4.3 Employees with salary levels higher than those determined by job evaluation by occupation for the period 1 April 2014 to 31 March 2015

Occupation Number of Job evaluation level Remuneration Reason for deviation employees level None

Total number of employees whose salaries exceeded the level determined by job 0 evaluation Percentage of total employed 0

The following table summarises the beneficiaries of the above in terms of race, gender, and disability.

Table 3.4.4 Profile of employees who have salary levels higher than those determined by job evaluation for the period 1 April 2014 and 31 March 2015

Total number of Employees whose salaries exceeded the grades determine by job evaluation 0

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Employment Changes This section provides information on changes in employment over the financial year. Turnover rates provide an indication of trends in the employment profile of the department. The following tables provide a summary of turnover rates by salary band and critical occupations.

Table 3.5.1 Annual turnover rates by salary band for the period 1 April 2014 to 31 March 2015

Salary band Number of Appointments Terminations Turnover rate employees at and transfers and beginning of period- into the transfers out 1 April 2014 department of the department Lower skilled ( Levels 1-2) 0 0 0 0% Skilled (Levels 3-5) 63 49 1 2.0% Highly skilled production 145 26 5 3% (Levels 6-8) Highly skilled supervision 80 23 2 3% (Levels 9-12) Senior Management Service Bands A 20 1 1 5% Senior Management Service Bands B 5 0 0 0 Senior Management Service Bands C 1 0 0 0 Senior Management Service Bands D 1 0 0 0 Contracts 1 0 0 0 Total 316 99 9 3%

Table 3.5.2 Annual turnover rates by critical occupation for the period 1 April 2014 to 31 March 2015

Critical occupation Number of Appointments Terminations Turnover rate employees at and transfers and beginning of into the transfers out period-April 2014 department of the department Technical/Engineering Related Advisory 9 0 2 22.2% Services Total 9 0 2 22.2%

The table below identifies the major reasons why staff left the department.

Table 3.5.3 Reasons why staff left the department for the period 1 April 2014 to 31 March 2015

Termination Type Number % of Total Resignations Death 0 0% Resignation 03 0.88% Expiry of contract 03 0.88% Dismissal – operational changes 02 0.58% Dismissal – misconduct 01 0.29% Dismissal – inefficiency 0 0% Discharged due to ill-health 0 0% Retirement 08 2.35% Transfer to other Public Service Departments 06 1.76% Other 0 0%

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Total 23 9% Total number of employees who left as a % of total 23 9% employment

Table 3.5.4 Promotions by critical occupation for the period 1 April 2014 to 31 March 2015

Occupation Employees Promotions Salary level Progressions Notch progression as a % 1 April to another promotions as to another of employees by 2014 salary level a % of notch within occupation employees by a salary level occupation ------Total - - - - -

Table 3.5.5 Promotions by salary band for the period 1 April 2014 to 31 March 2015

Salary Band Employees Promotions Salary Progressions Notch progression as a % of 1 April to another bands to another employees by salary bands 2014 salary level promotions notch within as a % of a salary level employees by salary level Lower skilled (Levels 1- 0 0 0 0 0 2) Skilled 49 4 8% 7 (Levels 3-5) Highly skilled production 130 1 1% 2 (Levels 6-8) Highly skilled supervision 70 4 6% 0 (Levels 9-12) Senior Management 19 0 0% 0 (Level 13-16) Total 268 9 3.% 9

3.5. Employment Equity

Table 3.6.1 Total number of employees (including employees with disabilities) in each of the following occupational categories as on 31 March 2015

Occupational Male Female Total category African Coloured Indian White African Coloured Indian White Legislators, senior 11 0 0 0 7 1 0 0 19 officials and managers Professionals 0 0 0 0 0 0 0 0 0 Technicians and 2 6 0 0 0 1 0 0 9 associate professionals Clerks 1 0 0 0 22 1 0 0 24 Service and sales 0 0 0 0 0 0 0 0 0 workers Skilled agriculture and 0 0 0 0 0 0 0 0 0

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fishery workers Craft and related 0 0 0 0 0 0 0 0 0 trades workers Plant and machine 0 0 0 0 0 0 0 0 0 operators and assemblers Elementary 0 0 0 0 0 0 0 0 0 occupations Total Employees 14 6 0 0 29 3 0 0 52 with disabilities

Table 3.6.2 Total number of employees (including employees with disabilities) in each of the following occupational bands as on 31 March 2015

Occupational band Male Female Total African Coloured Indian White African Coloured Indian White Top Management 4 0 0 0 2 0 0 0 6 14-16 Senior Management 13 7 0 0 0 5 1 0 0 13 Professionally qualified 37 6 0 5 28 4 0 7 87 and experienced specialists and mid- management 9-12 Skilled technical and 39 0 0 2 79 3 0 19 142 academically qualified workers, junior management, supervisors, foreman and superintendents 6-8 Semi-skilled and 28 0 0 1 24 1 0 0 54 discretionary decision making 3-5 Unskilled and defined 0 0 0 0 0 0 0 0 0 decision making 1-2 Total 115 6 0 8 138 9 0 26 302

Table 3.6.3 Recruitment for the period 1 April 2014 to 31 March 2015

Occupational band Male Female Total African Coloured Indian White African Coloured Indian White Top Management 0 0 0 0 0 0 0 0 0 Senior Management 1 0 0 0 1 0 0 0 2 Professionally qualified 4 0 0 1 2 0 0 0 7 and experienced specialists and mid- management Skilled technical and 3 0 0 0 8 0 0 1 12 academically qualified workers, junior management, supervisors, foreman and superintendents Semi-skilled and 0 0 0 0 4 0 0 0 4 discretionary decision making

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Unskilled and defined 0 0 0 0 0 0 0 0 0 decision making Total (Employees with 8 0 0 1 15 0 0 1 25 disabilities taken care of)

Table 3.6.4 Promotions for the period 1 April 2014 to 31 March 2015

Occupational band Male Female Total African Coloured Indian White African Coloured Indian White Top Management 0 0 0 0 0 0 0 0 0 Senior Management 0 0 0 0 0 0 0 0 0 Professionally qualified 0 0 0 1 0 0 0 0 1 and experienced specialists and mid- management Skilled technical and 0 0 0 1 0 0 0 0 1 academically qualified workers, junior management, supervisors, foreman and superintendents Semi-skilled and 5 0 0 0 0 0 0 0 5 discretionary decision making Unskilled and defined 0 0 0 0 0 0 0 0 0 decision making Total (Employees with 5 0 0 2 0 0 0 0 7 disabilities)

Table 3.6.5 Terminations for the period 1 April 2014 to 31 March 2015

Occupational band Male Female Total African Coloured Indian White African Coloured Indian White Top Management 0 0 0 0 0 0 0 0 Senior Management 1 0 0 0 2 0 0 0 3 Professionally qualified and 2 0 0 3 2 1 0 0 8 experienced specialists and mid-management Skilled technical and 6 0 0 1 5 0 0 1 13 academically qualified workers, junior management, supervisors, foreman and superintendents Semi-skilled and discretionary 0 0 0 0 1 2 0 3 decision making Unskilled and defined 0 0 0 0 0 0 0 0 0 decision making Employees with Disabilities 0 0 0 0 0 0 0 0 0 Total (Employees with 9 0 0 4 10 3 0 1 27 disabilities)

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Table 3.6.6 Disciplinary action for the period 1 April 2014 to 31 March 2015

Disciplinary action Male Female Total

African Coloured Indian White African Coloured Indian White Disciplinary action

Demotion 0 0 0 0 0 0 0 0 0 Final written warning 0 0 0 0 01 0 0 0 01 Written warning 0 0 0 0 0 0 0 0 0 Dismissal 01 0 0 0 0 0 0 0 01 Suspension without pay 0 0 0 0 01 0 0 0 01 TOTAL 01 0 0 0 02 0 0 0 03

Table 3.6.7 Skills development for the period 1 April 2014 to 31 March 2015

Occupational category Male Female Total African Coloured Indian White African Coloured Indian White Legislators, senior officials and 30 0 1 4 30 1 0 2 68 managers Professionals 8 0 0 0 0 0 0 0 8 Technicians and associate professionals Clerks 86 0 0 0 116 2 0 30 234 Service and sales workers 0 0 0 0 0 0 0 0 0 Skilled agriculture and fishery 0 0 0 0 0 0 0 0 0 workers Craft and related trades workers 0 0 0 0 0 0 0 0 0 Plant and machine operators and 0 0 0 0 0 0 0 0 0 assemblers Elementary occupations 0 0 0 0 0 0 0 0 0 Total 124 0 1 4 146 3 0 32 310 *Employees with disabilities are included in the above occupations

3.6. Signing of Performance Agreements by SMS Members

Table 3.7.1 Signing of Performance Agreements by SMS members as on 31 May 2014

SMS Level Total number of Total number of SMS Total number of Signed performance funded SMS posts members signed performance agreements as % of agreements total number of SMS members Director-General/ 1 1 1 100% Head of Department Salary Level 15 1 1 1 100% Salary Level 14 5 5 2 40% Salary Level 13 14 14 10 71% Total 21 21 14 66%

Table 3.7.2 Reasons for not having concluded Performance agreements for all SMS members as on 31 May 2014

Reasons Six of the SMS members were on suspension. One SMS Member was only appointed after May 2014.

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Table 3.7.3 Disciplinary steps taken against SMS members for not having concluded Performance agreements as on 31 May 2014

Reasons Not applicable

3.7. Performance Rewards

Table 3.8.1 Performance Rewards by race, gender and disability for the period 1 April 2014 to 31 March 2015

Beneficiary Profile Cost Race and Gender Number of Number of % of total Cost (R’000) Average cost beneficiaries employees within group per employee

AFRICAN 115 203 56% n/a n/a Male 45 95 47% n/a n/a Female 70 108 64% n/a n/a ASIAN 1 1 100% n/a n/a Male 0 0 0 n/a n/a Female 1 1 100% n/a n/a COLOURED 6 6 100% n/a n/a Male 0 0 0 n/a n/a Female 6 6 100% n/a n/a WHITE 27 30 90% n/a n/a Male 9 11 81% n/a n/a Female 18 19 94% n/a n/a Employees with disability 0 1 0% n/a n/a TOTAL 149 241 62% 2 059 13 815.00

NB. Employees with disabilities are included in the above occupations. The total cash bonus excluded notches and SMS members‟ bonuses. It is only from levels 1-12 officials. Also the system does not provide information on costs and average per race.

Table 3.8.2 Performance Rewards by salary band for personnel below Senior Management Service for the period 1 April 2014 to 2015 Beneficiary Profile Cost Total cost as a Salary band Number of Number of % of total Total Cost Average cost % of the total beneficiaries employees within salary (R’000) per employee personnel bands expenditure

Lower skilled levels 0 0 0% 0 0 0% 1-2 Skilled levels 3-5 6 30 20% 144 24 010 6% Highly skilled 94 139 67% 993 10562 48% production level 6-8 Highly skilled 46 67 68% 885 19230 42% supervision 9-12 Contract (levels 9- 3 5 60% 37 12346 1% 12) Total 149 241 62% 2059 13 815 100%

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Table 3.8.3 Performance Rewards by critical occupation for the period 1 April 2014 to 31 March 2015

Beneficiary Profile Cost Critical occupation Number of Number of % of total Total Cost Average cost beneficiaries employees within (R’000) per employee occupation Technical/Engineering Related N/A N/A N/A N/A N/A Advisory Services Total N/A N/A N/A N/A N/A

Table 3.8.4 Performance related rewards (cash bonus), by salary band for Senior Management Service for the period 1 April 2014 to 31 March 2015

Beneficiary Profile Cost Total cost as a Salary band Number of Number of % of total Total Cost Average cost % of the total beneficiaries employees within salary (R’000) per employee personnel bands expenditure

Band A 8 14 57% 789 587.77 83 000.00 65% Band B 2 5 40% 295 539.30 140 000.00 24% Band C 1 1 100% 113 691.00 113 691.00 9% Band D 0 1 0% 0 0 0% Total 11 21 52% 1 198 818 83 000.00 100%

3.8. Foreign Workers

The tables below summarise the employment of foreign nationals in the department in terms of salary band and major occupation.

Table 3.9.1 Foreign workers by salary band for the period 1 April 2014 to 31 March 2015

Salary band 01 April 2014 31 March 2015 Change Number % of total Number % of total Number % Change Lower skilled 0 0 0 0 0 0

Highly skilled production 1 11% 1 12.5% 0 0 (Levels 6-8) Highly skilled supervision 0 0 0 0 0 0 (Levels 9-12) Contract (Levels 9-12) 7 78% 6 75% 1 100% Contract (Levels 13-16) 1 11% 1 12.5% 0 0 Total 9 100% 8 2.66% 1 100%

Table 3.9.2 Foreign workers by major occupation for the period 1 April 2013 to 31 March 2014

Major occupation 01 April 2014 31 March 2015 Change Number % of total Number % of total Number % Change Engineering Related 8 2.77% 8 2.66% 1 0.33% Total 8 2.77% 8 2.66% 0.33%

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3.9. Leave utilisation

The Public Service Commission identified the need for careful monitoring of sick leave within the public service. The following tables provide an indication of the use of sick leave and disability leave. In both cases, the estimated cost of the leave is also provided.

Table 3.10.1 Sick leave for the period 1 January 2014 to 31 December 2014

Salary band Total % Days with Number of % of total Average Estimated days Medical Employees employees days per Cost certification using sick using sick employee (R’000) leave leave Lower Skills (Levels 1-2) 0 0 0 0 0 0 Skilled (Levels 3-5) 352 88.1 38 18.5 9 222 Highly skilled production (Levels 6- 976 110 8) 83.8 53.7 9 958 Highly skilled supervision (Levels 9 329 46 -12) 82.7 22.4 7 579 Top and Senior management 115 11 (Levels 13-16) 90.4 5.4 10 403 Total 1772 84.9 205 100 9 2162

Table 3.10.2 Disability leave (temporary and permanent) for the period 1 January 2014 to 31 December 2014

Salary band Total % Days with Number of % of total Average Estimated Cost days Medical Employees employees days per (R’000) certification using using employee disability disability leave leave Lower skilled (Levels 1-2) 0 0 0 0 0 0 Skilled (Levels 3-5) 116 100 6 35.3% 19 73,429.75 Highly skilled production (Levels 330 100 9 52.9 37 362,429.75 6-8) Highly skilled supervision (Levels 13 100 2 11.8% 7 27,823.10 9-12) Senior management (Levels 13- 0 0 0 0 0 0 16) Total 459 100 17 100% 27 466.6825

Table 3.10.3 Annual Leave for the period 1 January 2014 to 31 December 2014

Salary band Total days taken Number of Employees Average per employee using annual leave Lower skilled (Levels 1-2) 0 0 0 Skilled (Levels 3-5) 1,100.00 53 21 Highly skilled production 3,028.84 135 22

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(Levels 6-8) Highly skilled supervision (Levels 9- 1,729.00 71 24 12) Senior management 267 16 17 (Levels 13-16) Contract 6-8 3 1 3 Contract 9-12 19 2 10 Contract 13-16 7 1 7 Total 6513.84 279 23

Table 3.10.4 Capped leave for the period 1 January 2014 to 31 December 2014

Salary band Total Number of Average number Average capped leave days of Employees using of days taken per per employee as on 31 capped capped leave employee March 2014 leave taken Lower skilled 0 0 0 0 (Levels 1-2) Skilled (Levels 3-5) 0 0 0 0 Highly skilled production 0 0 0 0 (Levels 6-8) Highly skilled supervision( 18 3 6 21 Levels 9-12) Senior management (Levels 13-16) 0 0 0 0 Total 18 3 6 21

The following table summarise payments made to employees as a result of leave that was not taken.

Table 3.10.5 Leave pay-outs for the period 1 April 2014 to 31 March 2015 Reason Total amount Number of Average per (R’000) employees employee (R’000) Leave pay-out for 2014/15 due to non-utilisation of leave 0 0 0 for the previous cycle Capped leave pay-outs on termination of service for 127 5 25.4 2014/15 Current leave pay-out on termination of service for 0 0 0 2014/15 Total 127 9 25.4

3.10. HIV/AIDS & Health Promotion Programmes

Table 3.11.1 Steps taken to reduce the risk of occupational exposure Units/categories of employees identified to be at high risk of contracting HIV & related Key steps taken to reduce diseases (if any) the risk

NONE

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Table 3.11.2 Details of Health Promotion and HIV/AIDS Programmes Question Yes No Details, if yes 1. Has the department designated a x No designated SMS member has been specifically member of the SMS to implement the appointed to implement the provisions as stipulated in the provisions contained in Part VI E of PSR. Currently, this responsibility is carried out by the Chapter 1 of the Public Service Director: Human Resources Management and Regulations, 2001? If so, provide her/his Organizational Development, clearly this SMS member has name and position. a whole range of other responsibilities to manage. Name: Ms. N.A Matiwane Position: Director: Human Resources Management and Development 2 Does the department have a dedicated X No budget is designated to the Employee Health and unit or has it designated specific staff Wellness unit; funds are being availed per request for a members to promote the health and well- specific project from other programmes within the broader being of your employees? If so, indicate Corporate Services Chief Directorate. the number of employees who are involved in this task and the annual budget that is available for this purpose. 3 Has the department introduced an X The department has introduced Employee Health & Employee Assistance or Health Wellness programmes like: -EAP referral services Promotion Programme for your  Sporting activities for employees employees? If so, indicate the key  Observing related National/ International Health elements/services of this Programme. calendar day activities  The Policies of all Four Pillars have been signed by HOD including two Operational Plans 4. Has the department established (a) X Employee Health and Wellness committee and their committee(s) as contemplated in Part VI respective components: E.5 (e) of Chapter 1 of the Public Service Regulations, 2001? If so, please provide Offices of the MEC and HoD: the names of the members of the Mr Percy Ramosedi committee and the stakeholder(s) that Corporate Services Chief Directorate: they represent. Maki Van Wyk Financial and Supply Chain Management Chief Directorate: Mr. T Nkhese. Department Of Human Settlements: Mr. Tshenolo Molatedi Ms. Wandisa Soga Ms. Faith Mokoena Mr. Sabata Lebone Mr.Mike Moepane District Services Chief Directorate: Mr. Hoaeana (Welkom) Ms. Pulane Mokhachane (Sasolburg) Ms. Mamabefu Modipa (Qwa-Qwa) 5. Has the department reviewed its X At the moment, the department is operating on the employment policies and practices to Employee Health and Wellness Four Pillars of approved ensure that these do not unfairly policies including approved Operational Plans on SHERQ discriminate against employees on the and HIV and AIDS and TB Management in the department. basis of their HIV status? If so, list the employment policies/practices so reviewed. 6. Has the department introduced X Employee Wellness Day done in partnership with GEMS and measures to protect HIV-positive the department of Health do cover such during the day employees or those perceived to be HIV- screening and testing including educating our employees on positive from discrimination? If so, list the HIV and AIDS. Furthermore, employees during induction key elements of these measures. programme are further given awareness programme related to the Employee health and Wellness including HIV and AIDS

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Question Yes No Details, if yes 7. Does the department encourage its X During the departmental HCT campaign, the following were employees to undergo Voluntary discovered: Counselling and Testing? If so, list the HCT Results for Females: results that you have you achieved. 18 out of the 61 participants were tested. The results of the employees were confidentially shared with them. HCT Results for Males: 10 out of the 38 participants were tested. The results of the employees were confidentially shared with them. There is a challenge in relations to testing since employees are still afraid to test for HIV. 8. Has the department developed X The indicators are mainly with the Service providers and are measures/indicators to monitor & share confidentially with them. This financial year, 2015/16, evaluate the impact of its health the programme will ensure that monitoring and evaluation promotion programme? If so, list these results will be requested from service providers to reflect on measures/indicators. the indicators and intervention programmes on behalf of the employees. Thandile Health Risk Management results are mainly requested to assist in relations to intervention.

3.11. Labour Relations

Table 3.12.1 Collective agreements for the period 1 April 2014 and 31 March 2015 Total number of Collective agreements None TOTAL COLLECTIVE AGREEMENTS (PSCBC AND GPSSBC RESOLUTIONS)

th 1) GPSSBC Resolution 5 of 2014 – Agreement of recognition in improved qualifications Signed on 19 August 2014 in the public service st Signed on 31 July 2014 2) GPSSBC Resolution 4 of 2014 – Agreement on the increase of levies

th Signed on 7 July 2014 3) GPSSBC Resolution 3 of 2014 – Organizational rights agreement between the state as employer in the GPSSBC and admitted trade unions

th Signed on 10 February 4) PSCBC Resolution 01 of 2015 – Agreement on the review and impact of existing 2015. outsourcing and agentisation practices within the public service & conducting an independent impact study on the principles of decent work

th 5) PSCBC Resolution 01 of 2014 – Agreement on the transfer and placement of staff in Signed on 28 July 2014. the reconfiguration of Departments.

Table 3.12.2 Misconduct and disciplinary hearings finalised for the period 1 April 2014 to 31 March 2015 Outcomes of disciplinary hearings Number % of total Correctional counselling 0 0% Verbal warnings 0 0% Written warning 0 0% Final written warning 0 0% Suspended without pay coupled with fww 01 50% Fine 0 0% Demotion 0 0% Dismissal 01 50% Not guilty 0 0% Case withdrawn 0 0% Total 02 100%

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Table 3.12.3 Types of misconduct addressed at disciplinary hearings for the period 1 April 2014 to 31 March 2015 Type of misconduct Number % of total Misrepresentation & corruption 01 10% Code of conduct 0 0% Financial irregularities (case pending finalisation) 06 60% Unlawfully operating a money lending scheme 01 10% Abuse of government property 00 0% Absenteeism, insubordination, derogatory language & carrying a firearm at 01 10% work Dishonesty 01 10% TOTAL 10 100%

Table 3.12.4 Grievances logged for the period 1 April 2014 to 31 March 2015 Grievances Number % of Total Number of grievances resolved 09 64.28% Number of grievances not resolved 05 35.71% Total number of grievances lodged 14 100 %

Table 3.12.5 Disputes logged with Councils for the period 1 April 2014 to 31 March 2015 Disputes Number % of Total Number of disputes upheld 14 100% Number of disputes dismissed 0 0% Total number of disputes lodged 14

Table 3.12.6 Strike actions for the period 1 April 2014 to 31 March 2015 Total number of person working 0% Total number of persons working days 0 days lost lost Total cost of working days lost 0% Total costs working days lost 0

Amount (r‟000) recovered as a 0% Amount recovered as a result of no work 0 result of no work no pay no pay (R‟000)

Table 3.12.7 Precautionary suspensions for the period 1 April 2014 to 31 March 2015 Number of people suspended 11 Number of people whose suspension exceeded 30 days 10 Average number of days suspended 284.9 Cost of suspension(R‟000) R 7’ 705’ 476. 50

3.12. Skills development

Table 3.13.1 Training needs identified for the period 1 April 2014 to 31 March 2015 Occupational Gender Number of Training needs identified at start of the reporting period category employees Learnerships Skills Programmes & Other forms of Total as at 1 other short courses training April 2014 Legislators, senior Female 5 Executive Monitoring and HRDC Summit; 15 officials and managers Development Evaluation PSTF 10 Strategic Planning Conference; Policy Development Internal Auditor‟s Service Delivery Forum; IIASA Improvement Breakfast Forum Financial Management

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Budgeting Mentoring and coaching Male 20 Executive Performance Monitoring SITA CovTech 60 Development & Evaluation Conference ; 40 Service Delivery Annual Labour Improvement Law Coference; Fraud Prevention and IIASA Breakfast Anti-Corruption Forum; HRDC Middle Management Summit; PSTF Improvement Plan Conference; TLN Budget Management Conference Mentoring and coaching Project Khaedu Report writing Disciplinary & Investigation Skills Contract Drafting Legislative Drafting Emerging Management Dev Programme Financial Management for Non-Financial Job Evaluation Equate System Organizational Design & Development Compulsory Induction Programme Professionals Female 3 Project Management 8 Diversity Management 5 Risk Management Compulsory Induction Programme Male 33 Junior Report Writing 78 Management Code of Conduct 45 Conflict Management Computer skills Meeting and Minutes Taking Batho Pele Principles Customer Care Basic Computer Skills Office Admin Office Management Presentation Skills Records Management Time Management Diversity Management Risk Management Advance MS/Excel 2007 OHS Compulsory Induction

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Programme Technicians and Female 61 0 0 161 associate professionals 100 Male Executive Management and Corporate Development Leadership Governance Monitoring and Evaluation Performance Management Risk Management Fraud Prevention and Anti- Corruption Financial Management Budgeting Mentoring and coaching Project Khaedu Dialogic Facilitation Labour Relations Conflict resolution Knowledge management Report writing Clerks Female 5 Executive Monitoring and HRDC Summit; 15 Development Evaluation PSTF 10 Strategic Planning Conference; Policy Development Internal Auditor‟s Service Delivery Forum; IIASA Improvement Breakfast Forum Financial Management Budgeting Mentoring and coaching Male 20 Executive Performance Monitoring SITA CovTech 60 Development & Evaluation Conference ; 40 Service Delivery Annual Labour Improvement Law Coference; Fraud Prevention and IIASA Breakfast Anti-Corruption Forum; HRDC Middle Management Summit; PSTF Improvement Plan Conference; TLN Budget Management Conference Mentoring and coaching Project Khaedu Report writing Disciplinary & Investigation Skills Contract Drafting

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Legislative Drafting Emerging Management Dev Programme Financial Management for Non-Financial Job Evaluation Equate System Organizational Design & Development Compulsory Induction Programme Service and sales Female 3 Project Management 8 workers Diversity Management 5 Risk Management Compulsory Induction Programme Male 33 Junior Report Writing 78 Management Code of Conduct 45 Conflict Management Computer skills Meeting and Minutes Taking Batho Pele Principles Customer Care Basic Computer Skills Office Admin Office Management Presentation Skills Records Management Time Management Diversity Management Risk Management Advance MS/Excel 2007 OHS Compulsory Induction Programme Skilled agriculture and Female 61 0 0 161 fishery workers 100 Male Executive Management and Corporate Development Leadership Governance Monitoring and Evaluation Performance Management Risk Management Fraud Prevention and Anti- Corruption Financial Management

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Budgeting Mentoring and coaching Project Khaedu Dialogic Facilitation Labour Relations Conflict resolution Knowledge management Report writing Craft and related trades Female 5 Executive Monitoring and HRDC Summit; 15 workers Development Evaluation PSTF 10 Strategic Planning Conference; Policy Development Internal Auditor‟s Service Delivery Forum; IIASA Improvement Breakfast Forum Financial Management Budgeting Mentoring and coaching Male 20 Executive Performance Monitoring SITA CovTech 60 Development & Evaluation Conference ; 40 Service Delivery Annual Labour Improvement Law Coference; Fraud Prevention and IIASA Breakfast Anti-Corruption Forum; HRDC Middle Management Summit; PSTF Improvement Plan Conference; TLN Budget Management Conference Mentoring and coaching Project Khaedu Report writing Disciplinary & Investigation Skills Contract Drafting Legislative Drafting Emerging Management Dev Programme Financial Management for Non-Financial Job Evaluation Equate System Organizational Design & Development Compulsory Induction Programme Plant and machine Female 3 Project Management 8 operators and Diversity Management assemblers 5 Risk Management Compulsory Induction Programme Male 33 Junior Report Writing 78

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Management Code of Conduct 45 Conflict Management Computer skills Meeting and Minutes Taking Batho Pele Principles Customer Care Basic Computer Skills Office Admin Office Management Presentation Skills Records Management Time Management Diversity Management Risk Management Advance MS/Excel 2007 OHS Compulsory Induction Programme Elementary Female 61 0 0 161 occupations 100 Male Executive Management and Corporate Development Leadership Governance Monitoring and Evaluation Performance Management Risk Management Fraud Prevention and Anti- Corruption Financial Management Budgeting Mentoring and coaching Project Khaedu Dialogic Facilitation Labour Relations Conflict resolution Knowledge management Report writing Sub Total Female 5 Executive Monitoring and HRDC Summit; 15 Development Evaluation PSTF 10 Strategic Planning Conference; Policy Development Internal Auditor‟s Service Delivery Forum; IIASA Improvement Breakfast Forum

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Financial Management Budgeting Mentoring and coaching Male 20 Executive Performance Monitoring SITA CovTech 60 Development & Evaluation Conference ; 40 Service Delivery Annual Labour Improvement Law Conference+ Fraud Prevention and +; IIASA Anti-Corruption Breakfast Forum; Middle Management HRDC Summit; Improvement Plan PSTF Budget Management Conference; TLN Mentoring and coaching Conference Project Khaedu Report writing Disciplinary & Investigation Skills Contract Drafting Legislative Drafting Emerging Management Dev Programme Financial Management for Non-Financial Job Evaluation Equate System Organizational Design & Development Compulsory Induction Programme Total 3 Project Management 8 Diversity Management 5 Risk Management Compulsory Induction Programme

Table 3.13.2 Training provided for the period 1 April 2014 to 31 March 2015 Occupational category Gender Number of employees as at 1 April Training provided Skills Other forms Total 2014 within the Programmes of training reporting period & other short courses Leadership Legislators, senior officials and managers Female 3 Executive Monitoring - 3 development and Evaluation Strategic Planning Policy Development Service

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Delivery Improvement Financial Management Budgeting Mentoring and coaching Male 4 Management Monitoring - 4 Development and Evaluation Strategic Planning Policy Development Service Delivery Improvement Financial Management Budgeting Mentoring and coaching Professionals Female 1 1 Budget HRDC Management Summit; PSTF Conference; Internal Auditor‟s Forum; IIASA Breakfast Forum Male 7 7 Executive Budget SITA 11 Development Management CovTech Conference ; Annual Labour Law Conference; IIASA Breakfast Forum; HRDC Summit; PSTF Conference; TLN Conference Technicians and associate Female 2 Management Monitoring - 2 professionals Development and Evaluation Strategic Planning Policy Development

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Service Delivery Improvement Financial Management Budgeting Mentoring and coaching Male 4 Management Monitoring - 4 Development and Evaluation Strategic Planning Policy Development Service Delivery Improvement Financial Management Budgeting Mentoring and coaching Junior Diversity - - Management Management Project Management Compulsory Induction Performance Management

Male 28 Diversity Compulsory 28 Management Induction Project Management Compulsory Induction Performance Management

Female 21 Junior Diversity Compulsory 21 Management Management Induction Project Management Compulsory Induction Performance Management

Male - - - - - Elementary Occupations

3.13. Injury on duty

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The following tables provide basic information on injury on duty.

Table 3.14.1 Injury on duty for the period 1 April 2014 to 31 March 2015

Nature of injury on duty Number % of total Required basic medical attention only 1 100% Temporary Total Disablement 0 0% Permanent Disablement 0 0% Fatal 0 0% Total 1 100%

3.14. Utilisation of Consultants (To be finalized)

The following tables relate information on the utilisation of consultants in the department. In terms of the Public Service Regulations “consultant‟ means a natural or juristic person or a partnership who or which provides in terms of a specific contract on an ad hoc basis any of the following professional services to a department against remuneration received from any source:

(a) The rendering of expert advice; (b) The drafting of proposals for the execution of specific tasks; and (c) The execution of a specific task which is of a technical or intellectual nature, but excludes an employee of a department.

Table 3.15.1 Report on consultant appointments using appropriated funds for the period 1 April 2014 to 31 March 2015

Contract Consultants Total number Duration of value in Project title consultants that worked (work days) Rand on project

Bloemfontein -100 Del Two CMax E'tsho Civils 1 171 days 9 365 745.48 Bloemfontein-100 Heidedal CMax E'tsho Civils 1 171 days 11 094 700.00 Malay Kamp-RUWACON E'tsho Civils 1 171 days 7 433 449.00 CMax-Delapidated Houses(2) E'tsho Civils 1 171 days 84 065.79 Caleb Motshabi E'tsho Civils 1 171 days 27 000 000.00 Mob Business 78 E'tsho Civils 1 171 days 588 394.59 Moyakhe-94 E'tsho Civils 1 171 days 2 353 578.36 Bloemfontein 355 M2M E'tsho Civils 1 171 days 21 686 543.46 Ruwacon-Real Deal E'tsho Civils 1 171 days 672 522.96 Ruwacon-Shale (Retention) E'tsho Civils 1 171 days 168 130.74 Superb Home 500 (14 Additional Units) E'tsho Civils 1 171 days 1 176 915.18 Superb Home (YBK)51 E'tsho Civils 1 171 days 4 287 333.87 Naturena Rock 11 (Military Vet) E'tsho Civils 1 171 days 84 065.37 Tochgekregen Farm E'tsho Civils 1 171 days 1 620 162.36

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Pamper 371 Botshabelo E'tsho Civils 1 171 days 19 755 361.95 Suprim Trading 396 Botshabelo Dibetsi Consulting 1 165 days 26 564 656.92 Matsapa Trading 124 Botshabelo Dibetsi Consulting 1 165 days 3 867 007.02 Biz Africa Botshabelo 50 Dibetsi Consulting 1 165 days 1 345 045.92 Phukallang Basali Botshabelo 79 Dibetsi Consulting 1 165 days 4 406 802.49 Kentha Developers-30 Botshabelo Dibetsi Consulting 1 165 days 1 856 948.70 Biz Africa-Thaba Nchu 26 E'tsho Civils 1 171 days 168 130.74 Rehauhetswe-Botshabelo 41 Dibetsi Consulting 1 165 days 2 156 125.50 Your Trade 250 (54) Thaba Nchu E'tsho Civils 1 171 days 673 439.52 Your Trade (Jore) 229 Dibetsi Consulting 1 165 days 16 531 537.50 Your Trade (Rehauhetswe) 20 E'tsho Civils 1 171 days 1 357 659.44 Your Trade ( People First) 54 E'tsho Civils 1 171 days 2 635 456.56 Caleb Motshabi-1000 (New) Mafuri Infrastructure 36 574 507.00 1 329 days Africa Brandwag Social Housing Project LTE 1 242 days 16 590 910.00 Hillside View Social Housing Project LTE 1 242 days 20 000 000.00 Dark & Silver City Hostels LTE 1 242 days 30 000 000.00 Merriespruit CRU Rental Housing Phetogo Consulting 1 302 days 6 999 997.50 President Steyn CRU N/A 0 N/A G Hostel CRU Rental Family Units LTE 1 242 days 40 000 000.00 Harmony 3-500 CRU(feasibily) N/A 0 N/A 2 000 000.00 Thandanani 2010-1424 Sido Consulting 1 N/A 38 505 643.52 Nyakallong,300-Portion 8 of Uitkyk 258 N/A 0 N/A 256 020.00 Bronville:erven32179,23180,32371(Ext 10 N/A 54 455.00 0 N/A Homestead 668) Broville Freedom N/A 296 060.10 0 N/A Square:erven14136,15534,28068,28069 Kutlwanong(Odendalsrus):Prtn 2 & remndr N/A 268 366.00 0 N/A of leeubosch 285 Thandanani-Greenfield) Sido Consulting 1 N/A 12 426 064.00 Welkom Bedelia 200-Distinctive Choice Mafuri Infrastructure 168 131.58 1 329 days (Retention) Africa Bronville 200-M2M (34) Mafuri Infrastructure 1 008 789.48 1 329 days Africa Welkom 300-Quick Leap Morula Consulting 1 0 days 8 405 637.00 Welkom 1700-Quick Leap Morula Consulting 1 N/A 8 405 637.00 Mmamahabane N/A 0 N/A 277 670.00 Phomolong N/A 0 N/A 154 945.00 Henneman 200 CMAX Mafuri Infrastructure 5 214 509.00 1 329 days Africa Welkom 200 Etsho Civils Mafuri Infrastructure 11 094 700.00 1 329 days Africa Bronville -Two Roomed Houses Mafuri Infrastructure 11 094 700.00 Rectification Africa 1 329 days Ventersburg 50-M2M Mafuri Infrastructure 221 894.00 1 329 days Africa

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Ventersburg 80- Future Solar Morula Investments 1 N/A 8 875 760.00 Lejweleputswa 126-CMAX Mafuri Infrastructure 13 979 322.00 1 329 days Africa Ventersburg 20-Future Solar Mafuri Infrastructure 2 700 000.00 1 329 days Africa Henneman 111-Amkelo(Land Dibetsi Consulting 2 272 860.00 1 165 days Restitution)27 Ventersburg 5-M2M(Retention) Mafuri Infrastructure 167 502.86 1 329 days Africa Teachers Cottages Henneman-Amkelo Morula Consulting 1 N/A 750 000.00 (Wesselsbron)Manyakeng Water & Sewer IGS 34 401 000.00 1 reticulation for 1000 sites + LR 112 N/A Township Establishment-Bothaville 1500 N/A 1 061 880.00 0 N/A Wesselsbron 112-CMax Morula Consulting 12 426 064.00 1 N/A Wesselsbron 82-Amkelo Morula Consulting 6 892 622.34 1 N/A Phahameng/Bultfontein N/A 172 040.00 0 N/A Tikwana Hoopstad N/A 142 012.64 0 N/A Phahameng water and sewer reticulation N/A 21 507 552.00 0 for erven 837 N/A Verkeerdevlei N/A 550 296.00 0 N/A Brandfort 200-Lihle Marketing IGS 5 043 382.20 1 1 day Winburg 100-MKRK IGS 3 110 085.69 1 N/A Winburg 106 MKRK (14) IGS 840 563.70 1 N/A Brandfort 109 Ntilane(10)(Naturena) IGS 840 563.70 1 22 days Naturena Rock (Woman's Built)100 IGS 2 941 972.95 1 Brandfort 22 days Naturena Rock (Moraphooko) 100 (38) IGS 2 017 352.88 1 N/A Naturena Rock 28 Mafuri Infrastructure 168 112.74 1 Africa 329 days Naturena Rock 156 IGS 4 875 269.46 1 N/A Soutpan 101-Ruwacon Dibetsi Consulting 11 205 647.00 1 165 days Bultfontein 150-Distinctive Choice Mafuri Infrastructure 168 112.74 1 (Retention) Africa 329 days Hertzogville 100-Ruwacon(42) Dibetsi Consulting 4 659 774.00 1 165 days Hoopstad 100-Setsoto Brick Mafuri Infrastructure 672 450.96 1 Africa 329 days Boshof 79-Phukallang Basadi Mafuri Infrastructure 168 112.74 1 Africa 329 days Dealsville 70-Ruwacon Dibetsi Consulting 7 766 290.00 1 165 days Boshof 35 Dibetsi Consulting 3 883 145.00 1 165 days Dealsville 60-PB (Ruwacon) Retention Mafuri Infrastructure 168 112.94 1 329 days Africa Rammulotsi Road & Storm Water E'tsho Civils 11 454 412.00 1 (Reticulation) 171 days Kroonstad 100-Lesoli Construction IGS 1 440 000.00 1 22 days Viljoenskroon 100-Mminathoko Mafuri Infrastructure 168 112.74 1 Africa 329 days Kroonstad-350-Thotela Bogolo Morula Consulting 21 014 092.50 1 N/A Future Solar-Brentpark Kroonstad IGS 3 987 500.00 1 N/A

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Future Solar-Viljoenskroon IGS 5 883 945.90 1 N/A Uvoko Civils & Maintenance IGS 4 202 818.50 1 N/A Bokahosane Ba Bana Morula Consulting 6 999 999.90 1 N/A Kroonstad 171-Moleboheng Developers IGS 13 364 962.83 1 N/A Orangeville 48-Thutelabogolo Enterprise Mafuri Infrastructure 168 112.74 1 Africa 329 days Water and Sewer reticulation IGS 24 980 867.62 2614(Refengkgotso) Mooiplats 1 581(Greenfield) + N/A New Project (Greenfield)(Refenkgotso) IGS 36 723 457.00 1 N/A Orangeville 150-SEDTrade Phetogo Consulting 2 941 972.95 1 302 days Sasolburg 400- Phetogo Consulting 18 408 345.03 1 302 days Sasolburg 500- Phetogo Consulting 4 623 100.35 1 302 days Sasolburg 400- Mafuri Infrastructure 168 112.74 1 Africa 329 days Zamdela Hostel 4 Morula Consulting 40 000 002.90 1 N/A Phiritona Ext 10(922)& Tumahole Ext N/A 679 755.89 0 7(964)Approval in Jan 14 N/A Phiritona Ext 9(600) N/A 769 200.00 0 N/A Ngwathe 5300-Tumahole 1000,Phiritona N/A 1 768 610.00 0 1000, Mokwallo 700 N/A Heilbron 150-Robs Inv Mafuri Infrastructure 168 112.74 1 Africa 329 days Heilbron 300-MB MAlatjie Mafuri Infrastructure 2 521 691.10 1 Africa 329 days Heilbron 250-MB Malatjie Morula Consulting 12 608 455.50 1 329 days Koppies 350-Thotela Bogolo Morula Consulting 25 216 911.00 1 329 days Parys 200-MB Malatjie Morula Consulting 12 020 060.91 1 329 days Heilbron-(One Door-Two Roomed Units Phetogo Consulting 5 547 350.00 1 Rectification) 302 days Frankfort/Villiers/Cornelia/Tweeling N/A 489 880.00 0 N/A Frankfort 500-SEDTRADE Phetogo Consulting 4 202 818.50 1 302 days Tweeling 300-SEDTRADE Phetogo Consulting 4 202 818.50 1 302 days Villiers 200-SEDTRADE Mafuri Infrastructure 168 112.74 1 Africa 329 days Schoonplaatz Phase 4 provision of services Morula Consulting 19 374 784.00 1 754 sites N/A Intabazwe 1029 N/A 397 152.84 0 N/A Qwaqwa 300 & 200 GT Molefe (Retetion) Mafuri Infrastructure 336 225.48 1 Africa 329 days GT Molefe-Qwaqwa 100 Dibetsi Consulting 11 097 400.00 1 165 days Subcobiz -Qwaqwa 100 (71) Mafuri Infrastructure 168 112.74 1 Africa 329 days Qwaqwa 400 & 1-Tswara Thebe Mafuri Infrastructure 368 000.00 1 Africa 329 days Harakisha 400 Tswara Thebe (396) Mafuri Infrastructure 4 508 000.00 1 Africa 329 days Qwaqwa 300-Robs Construction Mafuri Infrastructure 4 324 000.00 1 Africa 329 days Kerstel 100-Robs Construction Mafuri Infrastructure 184 000.00 1 329 days

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Africa Qwaqwa 400 Group Ywo(Retention) Mafuri Infrastructure 184 000.00 1 Africa 329 days Harrismith 100 Group Ywo (69) Mafuri Infrastructure 2 300 000.00 1 Africa 329 days Momoxa-Qwaqwa 100 (63) Mafuri Infrastructure 1 120 000.00 1 Africa 329 days Cedoh Trading-Qwaqwa 50 (38)(Retention) Mafuri Infrastructure 168 112.74 1 Africa 329 days Clarens & Diyatalawa 100-Tswara Thebe Mafuri Infrastructure 168 130.74 1 Africa 329 days Schoonplaatz Land Restitution 226 Gibb Engineering 26 454 204.00 1 N/A Qwaqwa 750H Project Group Ywo (479) Mafuri Infrastructure 7 061 491.08 1 Africa 329 days Qwaqwa 250 Bluegumbosch Group Ywo Mafuri Infrastructure 672 522.96 1 (230) Africa 329 days Bethlehem 500-(Barken Park Ext 5) Morula Consulting 53 670 400.00 1 N/A Excelsior Mahlatswetsa Ext 3 Water & Phetogo Consulting 10 715 232.00 1 Sewer Reti 302 days Thaba-Phatswa Bulk Morula Consulting 5 000 000.00 1 N/A Teachers Cottage Tweespruit Dibetsi Consulting 1 173 545.00 1 165 days Baken Park Ext 6 N/A Rate only 0 N/A Dihlabeng CRU(Feasibility) N/A 4 000 000.00 0 N/A Abuja-Paul Roux 52 Mafuri Infrastructure 3 446 680.17 1 Africa 329 days Abuja-Bethlehem 1 Mafuri Infrastructure 84 056.37 1 Africa 329 days Rosendal 21 Tswara Thebe (17) Mafuri Infrastructure 1 429 111.29 1 Africa 329 days Rosendal 50 Tswara Thebe (Retention) Mafuri Infrastructure 168 130.74 1 Africa 329 days Tlhoriso General Construction Senekal 150 Mafuri Infrastructure 6 880 388.00 1 Africa 329 days Reitz Petsana Ext 7 Water and Sewer Reti LTE 18 012 896.00 1 701 sites 242 days Lindley Abuja 100(Retention) Mafuri Infrastructure 168 112.74 Africa 1 329 days Petrus Steyn 350-Vheranani 113 (1 unit) Mafuri Infrastructure 252 169.11 Africa 1 329 days Reitz 50-Retlaphel (49) Mafuri Infrastructure 168 112.74 Africa 1 329 days Ruwacon Reitz 100 (47) Mafuri Infrastructure 3 110 085.69 Africa 1 329 days Warden 94-Tswara Thebe 94 Mafuri Infrastructure 7 901 298.78 Africa 1 329 days Warden 31-Tswara Thebe(29) Mafuri Infrastructure 2 437 634.73 Africa 1 329 days

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Warden 336-Tswara Thebe Gibb Engineering 18 660 514.14 1 N/A Warden/Vrede/Memel 6000 sites N/A 902 520.00 0 N/A Memel Ext 1 Water & Sewer Reticulation Dibetsi Consulting 8 370 000.00 1 for 310 sites 165 days Future Indefinate-Vrede 100(Retention) Mafuri Infrastructure 168 130.74 Africa 1 329 days Ficksburg 100-Tswara Thebe (Retention) Mafuri Infrastructure 168 112.74 Africa 1 329 days Ficksburg 300 & 70-Tswara Thebe Mafuri Infrastructure 336 225.48 (Retention) Africa 1 329 days Ficksburg (New Project) Greenfield Mafuri Infrastructure 41 716 072.00 Africa 1 329 days Superb Homes-Thaba Patswa100 Morula Consulting 4 454 987.61 1 329 days Matsapa Trading-Ficksburg 100 ( Mafuri Infrastructure 168 112.74 Retention) Africa 1 329 days Ladybrand/Hobhouse 60 Lebone Const. Mafuri Infrastructure 329 days 8 160 000.00 Africa 1

Hobhouse 60 Ruwacon(60) Mafuri Infrastructure 6 656 820.00 Africa 1 329 days Hobhouse 60 Ruwacon (46) Mafuri Infrastructure 3 866 593.02 Africa 1 329 days Ladybrand 200- Bokang Q Mafuri Infrastructure 1 344 901.92 Africa 1 329 days Ladybrand 100- Bokang Q (80) Mafuri Infrastructure 1 329 days 8 875 760.00 Africa

Ficksburg 70-Tswara Thebe Mafuri Infrastructure 1 329 days 168 112.74 Africa

Letsemeng 3400 erven N/A 1 283 160.00 0 N/A Jacobsdal Ratanang Ext 4 200 N/A 0 171 days 24 000.00 Springfontein 250-Mampotla Dora E'tsho Civils 1 171 days 6 052 058.64 Springfontein 250-Suprim Zastron E'tsho Civils 1 171 days 5 883 945.90 Springfontein Suprim 121 E'tsho Civils 1 171 days 10 170 820.77 Petrusburg 72-Sediti E'tsho Civils 1 171 days 168 112.74 Gariep Dam-Sediti 66 E'tsho Civils 1 171 days 168 112.74 Koffiefontein 130-Sediti E'tsho Civils 1 171 days 168 112.74 Tierpoort 4 E'tsho Civils 1 171 days 998 857.96 Reddersburg 500 erven N/A 0 N/A 607 190.00 Bethulie 110-Zimvo Trading E'tsho Civils 1 171 days 1 051 876.70

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Suprim Trading -Zastron (100) E'tsho Civils 1 171 days 1 864 288.23 Leviticus-Smithfield 10(Retention) E'tsho Civils 1 171 days 168 130.74 Leviticus -Rouxville 100 (Retention) E'tsho Civils 1 171 days 168 130.74 Furn Serv Zastron 60 (Retention) E'tsho Civils 1 171 days 168 130.74 Bethulie 100-Mminathoko Trading Dibetsi Consulting 11 097 400.00 1 165 days Trompsburg Social Housing (Feasibility) N/A 0 N/A 2 000 000.00 Jaggersfontein-Sedite Construction 50 E'tsho Civils 1 171 days 1 670 931.25 Luckoff Teachers Cottages E'tsho Civils 1 171 days 1 248 667.45 Leviticus (Land Res,Tromp,Wepnr & De E'tsho Civils 960 884.40 1 171 days Wet) 7 Wepener 159-Bokang Q E'tsho Civils 1 171 days 168 112.74 Dewetsdorp 150-Lapeng CC E'tsho Civils 1 171 days 168 112.74 OPSCAP N/A 55 875 250.00 0 N/A Emergency N/A 22 000 000.00 0 N/A Unit Shortfall (50sqm+SANS10400XA) vs N/A 0 40sqm) N/A NHBRC N/A 15 000 000.00 0 N/A

Total number of projects Total individual consultants Total duration Total contract value in Work days Rand 186 10 R 1 280 929 009.01

Table 3.15.2 Report on consultant appointments using Donor funds for the period 1 April 2014 to 31 March 2015 Total Duratio Number of n consultant Donor and contract value Project title Consultants s that (Work in Rand worked on days) project

Bloemfontein -100 Del Two CMax E'tsho Civils 6 9 365 745.48 months 1 (171 days) Bloemfontein-100 Heidedal CMax E'tsho Civils 6 11 094 700.00 months 1 (171 days) Malay Kamp-RUWACON E'tsho Civils 6 7 433 449.00 months 1 (171 days) CMax-Delapidated Houses(2) E'tsho Civils 6 84 065.79 months 1 (171 days)

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Caleb Motshabi E'tsho Civils 6 27 000 000.00 months 1 (171 days) Mob Business 78 E'tsho Civils 6 588 394.59 months 1 (171 days) Moyakhe-94 E'tsho Civils 6 2 353 578.36 months 1 (171 days) Bloemfontein 355 M2M E'tsho Civils 6 21 686 543.46 months 1 (171 days) Ruwacon-Real Deal E'tsho Civils 6 672 522.96 months 1 (171 days) Ruwacon-Shale (Retention) E'tsho Civils 6 168 130.74 months 1 (171 days) Superb Home 500 (14 Additional Units) E'tsho Civils 6 1 176 915.18 months 1 (171 days) Superb Home (YBK)51 E'tsho Civils 6 4 287 333.87 months 1 (171 days) Naturena Rock 11 (Military Vet) E'tsho Civils 6 84 065.37 months 1 (171 days) Tochgekregen Farm E'tsho Civils 6 1 620 162.36 months 1 (171 days) Pamper 371 Botshabelo E'tsho Civils 6 19 755 361.95 months 1 (171 days) Suprim Trading 396 Botshabelo Dibetsi Consulting 1 N/A 26 564 656.92 Matsapa Trading 124 Botshabelo Dibetsi Consulting 1 N/A 3 867 007.02 Biz Africa Botshabelo 50 Dibetsi Consulting 1 N/A 1 345 045.92 Phukallang Basali Botshabelo 79 Dibetsi Consulting 1 N/A 4 406 802.49 Kentha Developers-30 Botshabelo Dibetsi Consulting 1 N/A 1 856 948.70 Biz Africa-Thaba Nchu 26 E'tsho Civils 6 168 130.74 months 1 (171 days) Rehauhetswe-Botshabelo 41 Dibetsi Consulting 1 N/A 2 156 125.50

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Your Trade 250 (54) Thaba Nchu E'tsho Civils 6 673 439.52 months 1 (171 days) Your Trade (Jore) 229 Dibetsi Consulting 1 N/A 16 531 537.50 Your Trade (Rehauhetswe) 20 E'tsho Civils 6 1 357 659.44 months 1 (171 days) Your Trade ( People First) 54 E'tsho Civils 6 2 635 456.56 months 1 (171 days) Caleb Motshabi-1000 (New) Mafuri Investments 1 N/A 36 574 507.00 Brandwag Social Housing Project LTE 1 N/A 16 590 910.00 Hillside View Social Housing Project LTE 1 N/A 20 000 000.00 Dark & Silver City Hostels LTE 1 N/A 30 000 000.00 Merriespruit CRU Rental Housing Phetogo Consulting 1 N/A 6 999 997.50 President Steyn CRU N/A 0 N/A G Hostel CRU Rental Family Units LTE 1 N/A 40 000 000.00 Harmony 3-500 CRU(feasibily) N/A 0 N/A 2 000 000.00 Thandanani 2010-1424 Sido Consulting 1 N/A 38 505 643.52 Nyakallong,300-Portion 8 of Uitkyk 258 N/A 0 N/A 256 020.00 Bronville:erven32179,23180,32371(Ext N/A 54 455.00 0 N/A 10 Homestead 668) Broville Freedom N/A 296 060.10 Square:erven14136,15534,28068,2806 0 N/A 9 Kutlwanong(Odendalsrus):Prtn 2 & N/A 268 366.00 0 N/A remndr of leeubosch 285 Thandanani-Greenfield) Sido Consulting 1 N/A 12 426 064.00 Welkom Bedelia 200-Distinctive Choice Mafuri Infrastructure 168 131.58 (Retention) Africa 1 N/A

Bronville 200-M2M (34) Mafuri Infrastructure 1 008 789.48 Africa 1 N/A

Welkom 300-Quick Leap Mafuri Infrastructure 8 405 637.00 Africa 1 N/A

Welkom 1700-Quick Leap Mafuri Infrastructure 8 405 637.00 Africa 1 N/A

Mmamahabane N/A 0 N/A 277 670.00 Phomolong N/A 0 N/A 154 945.00 Henneman 200 CMAX Mafuri Infrastructure 5 214 509.00 Africa 1 N/A

Welkom 200 Etsho Civils Mafuri Infrastructure 11 094 700.00 Africa 1 N/A

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13

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Bronville -Two Roomed Houses Mafuri Infrastructure 11 094 700.00 Rectification Africa 1 N/A

Ventersburg 50-M2M Mafuri Infrastructure 221 894.00 Africa 1 N/A

Ventersburg 80- Future Solar Morula Investments 1 N/A 8 875 760.00 Lejweleputswa 126-CMAX Mafuri Infrastructure 13 979 322.00 Africa 1 N/A

Ventersburg 20-Future Solar Mafuri Infrastructure 2 700 000.00 Africa 1 N/A

Henneman 111-Amkelo(Land Dibetsi Consulting 2 272 860.00 1 N/A Restitution)27 Ventersburg 5-M2M(Retention) Mafuri Infrastructure 167 502.86 1 N/A Africa Teachers Cottages Henneman-Amkelo Morula Consulting 1 N/A 750 000.00 (Wesselsbron)Manyakeng Water & IGS 34 401 000.00 Sewer reticulation for 1000 sites + LR 1 112 N/A Township Establishment-Bothaville N/A 1 061 880.00 0 1500 N/A Wesselsbron 112-CMax Morula Consulting 12 426 064.00 1 N/A Wesselsbron 82-Amkelo Morula Consulting 6 892 622.34 1 N/A Phahameng/Bultfontein N/A 172 040.00 0 N/A Tikwana Hoopstad N/A 142 012.64 0 N/A Phahameng water and sewer N/A 21 507 552.00 0 reticulation for erven 837 N/A Verkeerdevlei N/A 550 296.00 0 N/A Brandfort 200-Lihle Marketing IGS 5 043 382.20 1 N/A Winburg 100-MKRK IGS 3 110 085.69 1 N/A Winburg 106 MKRK (14) IGS 840 563.70 1 N/A Brandfort 109 Ntilane(10)(Naturena) IGS 840 563.70 1 N/A Naturena Rock (Woman's Built)100 IGS 2 941 972.95 1 Brandfort N/A Naturena Rock (Moraphooko) 100 (38) IGS 2 017 352.88 1 N/A Naturena Rock 28 Mafuri Infrastructure 168 112.74 1 Africa N/A Naturena Rock 156 IGS 4 875 269.46 1 N/A Soutpan 101-Ruwacon Dibetsi Consulting 11 205 647.00 1 N/A Bultfontein 150-Distinctive Choice Mafuri Infrastructure 168 112.74 1 (Retention) Africa N/A Hertzogville 100-Ruwacon(42) Dibetsi Consulting 4 659 774.00 1 N/A Hoopstad 100-Setsoto Brick Mafuri Infrastructure 672 450.96 1 Africa N/A Boshof 79-Phukallang Basadi Mafuri Infrastructure 168 112.74 1 Africa N/A Dealsville 70-Ruwacon Dibetsi Consulting 7 766 290.00 1 N/A Boshof 35 Dibetsi Consulting 3 883 145.00 1 N/A

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Dealsville 60-PB (Ruwacon) Retention Mafuri Infrastructure 6 168 112.94 Africa months 1 (171 days) Rammulotsi Road & Storm Water E'tsho Civils 11 454 412.00 1 (Reticulation) N/A Kroonstad 100-Lesoli Construction IGS 1 440 000.00 1 N/A Viljoenskroon 100-Mminathoko Mafuri Infrastructure 168 112.74 1 Africa N/A Kroonstad-350-Thotela Bogolo Morula Consulting 21 014 092.50 1 N/A Future Solar-Brentpark Kroonstad IGS 3 987 500.00 1 N/A Future Solar-Viljoenskroon IGS 5 883 945.90 1 N/A Uvoko Civils & Maintenance IGS 4 202 818.50 1 N/A Bokahosane Ba Bana Morula Consulting 6 999 999.90 1 N/A Kroonstad 171-Moleboheng IGS 13 364 962.83 1 Developers N/A Orangeville 48-Thutelabogolo Mafuri Infrastructure 168 112.74 1 Enterprise Africa N/A Water and Sewer reticulation IGS 24 980 867.62 2614(Refengkgotso) Mooiplats 1 581(Greenfield) + N/A New Project (Greenfield)(Refenkgotso) IGS 36 723 457.00 1 N/A Orangeville 150-SEDTrade Phetogo Consulting 2 941 972.95 1 N/A Sasolburg 400- Phetogo Consulting 18 408 345.03 1 N/A Sasolburg 500- Phetogo Consulting 4 623 100.35 1 N/A Sasolburg 400- Mafuri Infrastructure 168 112.74 1 Africa N/A Zamdela Hostel 4 Morula Consulting 40 000 002.90 1 N/A Phiritona Ext 10(922)& Tumahole Ext N/A 679 755.89 0 7(964)Approval in Jan 14 N/A Phiritona Ext 9(600) N/A 769 200.00 0 N/A Ngwathe 5300-Tumahole N/A 1 768 610.00 0 1000,Phiritona 1000, Mokwallo 700 N/A Heilbron 150-Robs Inv Mafuri Infrastructure 168 112.74 1 Africa N/A Heilbron 300-MB MAlatjie Mafuri Infrastructure 2 521 691.10 1 Africa N/A Heilbron 250-MB Malatjie Morula Consulting 12 608 455.50 1 N/A Koppies 350-Thotela Bogolo Morula Consulting 25 216 911.00 1 N/A Parys 200-MB Malatjie Morula Consulting 12 020 060.91 1 N/A Heilbron-(One Door-Two Roomed Units Phetogo Consulting 5 547 350.00 1 Rectification) N/A Frankfort/Villiers/Cornelia/Tweeling N/A 489 880.00 0 N/A Frankfort 500-SEDTRADE Phetogo Consulting 4 202 818.50 1 N/A Tweeling 300-SEDTRADE Phetogo Consulting 4 202 818.50 1 N/A Villiers 200-SEDTRADE Mafuri Infrastructure 168 112.74 1 Africa N/A Schoonplaatz Phase 4 provision of Morula Consulting 19 374 784.00 1 services 754 sites N/A Intabazwe 1029 N/A 397 152.84 0 N/A

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Qwaqwa 300 & 200 GT Molefe Mafuri Infrastructure 336 225.48 1 (Retetion) Africa N/A GT Molefe-Qwaqwa 100 Dibetsi Consulting 11 097 400.00 1 N/A Subcobiz -Qwaqwa 100 (71) Mafuri Infrastructure 168 112.74 Africa 1 N/A Qwaqwa 400 & 1-Tswara Thebe Mafuri Infrastructure 368 000.00 Africa 1 N/A Harakisha 400 Tswara Thebe (396) Mafuri Infrastructure 4 508 000.00 Africa 1 N/A Qwaqwa 300-Robs Construction Mafuri Infrastructure 4 324 000.00 Africa 1 N/A Kerstel 100-Robs Construction Mafuri Infrastructure 184 000.00 Africa 1 N/A Qwaqwa 400 Group Ywo(Retention) Mafuri Infrastructure 184 000.00 Africa 1 N/A Harrismith 100 Group Ywo (69) Mafuri Infrastructure 2 300 000.00 Africa 1 N/A Momoxa-Qwaqwa 100 (63) Mafuri Infrastructure 1 120 000.00 Africa 1 N/A Cedoh Trading-Qwaqwa 50 Mafuri Infrastructure 168 112.74 (38)(Retention) Africa 1 N/A Clarens & Diyatalawa 100-Tswara Mafuri Infrastructure 168 130.74 Thebe Africa 1 N/A Schoonplaatz Land Restitution 226 Gibb Engineering 26 454 204.00 1 N/A Qwaqwa 750H Project Group Ywo Mafuri Infrastructure 7 061 491.08 (479) Africa 1 N/A Qwaqwa 250 Bluegumbosch Group Mafuri Infrastructure 672 522.96 Ywo (230) Africa 1 N/A Bethlehem 500-(Barken Park Ext 5) Morula Consulting 53 670 400.00 1 N/A Excelsior Mahlatswetsa Ext 3 Water & Phetogo Consulting 10 715 232.00 1 Sewer Reti N/A Thaba-Phatswa Bulk Morula Consulting 5 000 000.00 1 N/A Teachers Cottage Tweespruit Dibetsi Consulting 1 173 545.00 1 N/A Baken Park Ext 6 N/A Rate 0 N/A only Dihlabeng CRU(Feasibility) N/A 4 000 000.00 0 N/A Abuja-Paul Roux 52 Mafuri Infrastructure 3 446 680.17 Africa 1 N/A Abuja-Bethlehem 1 Mafuri Infrastructure 84 056.37 1 N/A

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Africa

Rosendal 21 Tswara Thebe (17) Mafuri Infrastructure 1 429 111.29 Africa 1 N/A Rosendal 50 Tswara Thebe (Retention) Mafuri Infrastructure 168 130.74 Africa 1 N/A Tlhoriso General Construction Senekal Mafuri Infrastructure 6 880 388.00 150 Africa 1 N/A Reitz Petsana Ext 7 Water and Sewer LTE 18 012 896.00 1 Reti 701 sites N/A Lindley Abuja 100(Retention) Mafuri Infrastructure 168 112.74 Africa 1 N/A Petrus Steyn 350-Vheranani 113 (1 Mafuri Infrastructure 252 169.11 unit) Africa 1 N/A Reitz 50-Retlaphel (49) Mafuri Infrastructure 168 112.74 Africa 1 N/A Ruwacon Reitz 100 (47) Mafuri Infrastructure 3 110 085.69 Africa 1 N/A Warden 94-Tswara Thebe 94 Mafuri Infrastructure 7 901 298.78 Africa 1 N/A Warden 31-Tswara Thebe(29) Mafuri Infrastructure 2 437 634.73 Africa 1 N/A Warden 336-Tswara Thebe Gibb Engineering 18 660 514.14 1 N/A Warden/Vrede/Memel 6000 sites N/A 902 520.00 0 N/A Memel Ext 1 Water & Sewer Dibetsi Consulting 8 370 000.00 1 Reticulation for 310 sites N/A Future Indefinate-Vrede 100(Retention) Mafuri Infrastructure 168 130.74 Africa 1 N/A Ficksburg 100-Tswara Thebe Mafuri Infrastructure 168 112.74 (Retention) Africa 1 N/A Ficksburg 300 & 70-Tswara Thebe Mafuri Infrastructure 336 225.48 (Retention) Africa 1 N/A Ficksburg (New Project) Greenfield Mafuri Infrastructure 41 716 072.00 1 Africa N/A Superb Homes-Thaba Patswa100 Morula Consulting 4 454 987.61 1 N/A Matsapa Trading-Ficksburg 100 ( Mafuri Infrastructure 168 112.74 Retention) Africa 1 N/A Ladybrand/Hobhouse 60 Lebone Mafuri Infrastructure 8 160 000.00 Const. Africa 1 N/A

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Hobhouse 60 Ruwacon(60) Mafuri Infrastructure 6 656 820.00 Africa 1 N/A Hobhouse 60 Ruwacon (46) Mafuri Infrastructure 3 866 593.02 Africa 1 N/A Ladybrand 200- Bokang Q Mafuri Infrastructure 1 344 901.92 Africa 1 N/A Ladybrand 100- Bokang Q (80) Mafuri Infrastructure 8 875 760.00 Africa 1 N/A Ficksburg 70-Tswara Thebe Mafuri Infrastructure 168 112.74 Africa 1 N/A Letsemeng 3400 erven N/A 1 283 160.00 0 N/A Jacobsdal Ratanang Ext 4 200 6 24 000.00 months 0 (171 days) Springfontein 250-Mampotla Dora E'tsho Civils 6 6 052 058.64 months 1 (171 days) Springfontein 250-Suprim Zastron E'tsho Civils 6 5 883 945.90 months 1 (171 days) Springfontein Suprim 121 E'tsho Civils 6 10 170 820.77 months 1 (171 days) Petrusburg 72-Sediti E'tsho Civils 6 168 112.74 months 1 (171 days) Gariep Dam-Sediti 66 E'tsho Civils 6 168 112.74 months 1 (171 days) Koffiefontein 130-Sediti E'tsho Civils 6 168 112.74 months 1 (171 days) Tierpoort 4 E'tsho Civils 6 998 857.96 months 1 (171 days) Reddersburg 500 erven N/A 0 N/A 607 190.00 Bethulie 110-Zimvo Trading E'tsho Civils 6 1 051 876.70 months 1 (171 days) Suprim Trading -Zastron (100) E'tsho Civils 6 1 864 288.23 months 1 (171 days)

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PART D HUMAN RESOURCE MANAGEMENT

Leviticus-Smithfield 10(Retention) E'tsho Civils 6 168 130.74 months 1 (171 days) Leviticus -Rouxville 100 (Retention) E'tsho Civils 6 168 130.74 months 1 (171 days) Furn Serv Zastron 60 (Retention) E'tsho Civils 6 168 130.74 months 1 (171 days) Bethulie 100-Mminathoko Trading Dibetsi Consulting 11 097 400.00 1 N/A Trompsburg Social Housing N/A 2 000 000.00 0 N/A (Feasibility) Jaggersfontein-Sedite Construction 50 E'tsho Civils 6 1 670 931.25 months 1 (171 days) Luckoff Teachers Cottages E'tsho Civils 6 1 248 667.45 months 1 (171 days) Leviticus (Land Res,Tromp,Wepnr & E'tsho Civils 6 960 884.40 De Wet) 7 months 1 (171 days) Wepener 159-Bokang Q E'tsho Civils 6 168 112.74 months 1 (171 days) Dewetsdorp 150-Lapeng CC E'tsho Civils 6 168 112.74 months 1 (171 days) OPSCAP N/A 55 875 250.00 0 N/A Emergency N/A N/A 22 000 000.00 0 Unit Shortfall (50sqm+SANS10400XA) N/A N/A 0 vs 40sqm) NHBRC N/A N/A 15 000 000.00 0

Total individual Total duration Total contract value in Total number of projects consultants Rand Work days 186 10 R 1 280 929 009.01

3.15. Severance Packages

Table 3.16.1 Granting of employee initiated severance packages for the period 1 April 2014 to 31 March 2015 No severance packages were initiated and paid.

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PART D HUMAN RESOURCE MANAGEMENT

PART E: FINANCIAL INFORMATION

116

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PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL

Report of the Auditor General to the Free State Legislature on Vote no. 13: Department of Human Settlements

Report on the financial statements

Introduction

1 I have audited the financial statements of the Department of Human Settlements set out on pages 129 to 181, which comprise the appropriation statement, the statement of financial position as at 31 March 2015, the statement of financial performance, statement of changes in net assets, cash flow statement for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

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 the Modified Cash Standard prescribed by the National Treasury, the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA) and the Division of Revenue Act of South Africa, 2014 (Act No. 10 of 2014) (DoRA), 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.

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PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL

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

Basis for qualified opinion

Accruals and payables not recognised

6 The department did not have adequate systems to maintain records of accounts payable for goods and services received but not yet paid for. I was unable to obtain sufficient appropriate audit evidence for the amounts disclosed as accruals and payables not recognised in note 21 to the financial statements. I could not confirm accruals and payables by alternative means. Consequently, I was unable to determine whether any adjustment to accruals and payables stated at R956 860 000 in the financial statements was necessary. Commitments

7 I was unable to obtain sufficient appropriate audit evidence for commitments disclosed in note 20 to the financial statements as the department did not maintain accurate and complete records of the contractual information used to determine commitments. I could not confirm the amounts by alternative means. Consequently, I was unable to determine whether any adjustment to commitments stated at R2 032 824 000 in the financial statements was necessary.

Qualified opinion

8 In my opinion, except for the possible effects of the matters described in the basis for qualified opinion paragraphs, the financial statements present fairly, in all material respects, the financial position of the Department of Human Settlements as at 31 March 2015 and its financial performance and cash flows for the year then ended, in accordance with the Modified Cash Standards prescribed by the National Treasury and the requirements of the PFMA and DoRA.

Emphasis of matters

9 I draw attention to the matters below. My opinion is not modified in respect of these matters. Irregular expenditure

10 As disclosed in note 25 to the financial statements, the department incurred irregular expenditure of R980 965 000 (2014: R858 934 000) during the year under review as the department did not design and implement a policy relating to housing contracts that will address the constitutional requirement of fair, equitable and transparent procurement processes.

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PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL

Restatement of corresponding figures

11 As disclosed in note 32 to the financial statements, the corresponding figures for 31 March 2014 have been restated as a result of an error discovered during the financial year ending 31 March 2015 in the financial statements of the Department of Human Settlements at and for the year ended 31 March 2014. Significant uncertainties

12 With reference to note 19 to the financial statements, the department has received claims amounting to R98 495 000 (2014: R68 571 000). The department is opposing these claims. The outcome of the matter cannot presently be determined and no provision for any liability that may result has been made in the financial statements. Impairment of receivables

13 As disclosed in note 12 to the financial statements, material impairment of R3 227 000 was incurred as a result of irrecoverable debtors. The receivables are more than three years old and the impairment is due to unsuccessful attempts to recover the amount. Unspent transfers

14 As disclosed in note 7 to the financial statements, the department transfers funds to state agencies and other suppliers to assist the department to fulfil its mandate. The disclosed unspent funds at year end amounts to R130 246 000.

Additional matter

15 I draw attention to the matter below. My opinion is not modified in respect of this matter. Unaudited supplementary schedules

16 The supplementary information set out on pages 181 to 192 does not form part of the financial statements and is presented as additional information. I have not audited these schedules and, accordingly, I do not express an opinion thereon.

Report on other legal and regulatory requirements

17 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 predetermined objectives for selected programmes presented in the annual performance report, compliance with legislation and internal control. The objective of my tests was to identify reportable findings as described under each subheading but not to gather evidence to

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PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL express assurance on these matters. Accordingly, I do not express an opinion or conclusion on these matters.

Predetermined objectives

18. 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 department for the year ended 31 March 2015:  Programme 2: Housing needs, research and planning on pages 45 to 46  Programme 3: Housing development on pages 46 to 53

19. I evaluated the reported performance information against the overall criteria of usefulness and reliability.

20. I evaluated the usefulness of the reported performance information to determine whether it was presented in accordance with the National Treasury‟s annual reporting principles and whether the reported performance was consistent with the planned programmes. I further performed tests to determine whether indicators and targets were well defined, verifiable, specific, measurable, time bound and relevant, as required by the National Treasury’s Framework for managing programme performance information (FMPPI).

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

22. The material findings in respect of the selected programmes are as follows:

Programme 2: Housing needs, research and planning

Reliability of reported performance information

23. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. I was unable to obtain the information and explanations I considered necessary to satisfy myself as to the reliability of the reported performance information. This was due to the completeness of source documentation in support of actual achievements not being monitored and the validity of reported achievements not being frequently reviewed against source documentation.

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Programme 3: Housing development

Reliability of reported performance information

24. The FMPPI requires auditees to have appropriate systems to collect, collate, verify and store performance information to ensure valid, accurate and complete reporting of actual achievements against planned objectives, indicators and targets. Adequate and reliable corroborating evidence could not be provided for 29% of the targets to assess the reliability of the reported performance information. The auditee‟s records did not permit the application of alternative audit procedures. This was due to the completeness of source documentation in support of actual. Achievements not being monitored and the validity of reported achievements not being frequently reviewed against source documentation.

Additional matters

25. I draw attention to the following matters: Achievement of planned targets

26 Refer to the annual performance report on pages 45 to 46 and 46 to 53 for information on the achievement of planned targets for the year. This information should be considered in the context of the material findings on the reliability of the reported performance information for the selected programmes reported in paragraphs 23 and 24 of this report.

Compliance with legislation

27. I performed procedures to obtain evidence that the department 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: Strategic planning and performance management

28. Effective, efficient and transparent systems of internal control with respect to performance information and management was not maintained as required by section 38(1)(a)(i) of the PFMA. Annual financial statements

29. The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and supported by full and proper records as required by section 40(1)(a) and (b) of the PFMA. Material misstatements of disclosure items identified by the auditors in the submitted financial statements were subsequently corrected; the supporting records that could not be provided resulted in the financial statements receiving a qualified audit opinion.

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PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL

Procurement and contract management

30. I could not obtain sufficient appropriate audit evidence that all contracts were awarded in accordance with the legislative requirements as requested tender documentation could not be submitted.

31. Quotations were awarded to bidders who did not submit a declaration on whether they are employed by the state or connected to any person employed by the state, which is prescribed to comply with treasury regulation 16A8.3.

32. Persons in the service of the department whose close family members, partners or associates had a private or business interest in contracts awarded by the department failed to disclose such interest, as required by treasury regulation 16A8.4.

33 Persons in the service of other state institutions who had a private or business interest in contracts awarded by the department participated in the process relating to that contract in contravention of treasury regulation 16A8.4. Human resource management

34. Funded vacant posts were not filled within 12 months as required by public service regulation 1/VII/C.1A.2. Grants management

35 Sufficient appropriate audit evidence could not be obtained that the rectification process was performed on houses that qualified for rectification, in contravention of paragraph 2.3 of Part 3 of the Housing Code, issued in terms of section 4 of the Housing Act, 1997 (Act No. 107 of 1997). Expenditure management

36. Steps taken were not effective to prevent irregular and fruitless and wasteful expenditure, as required by section 38(1)(c)(ii) of the PFMA and treasury regulation 9.1.1.

37. Contractual obligations and money owed by the department were not settled within 30 days or an agreed period, as required by section 38(1)(f) of the PFMA and treasury regulation 8.2.3. Assets management

38. Proper control systems to safeguard and maintain assets were not implemented, as required by section 38(1)(d) of the PFMA and treasury regulation 10.1.1(a).

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PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL

Consequence management

39. Investigations were not conducted into all allegations of financial misconduct committed by officials, as required by treasury regulation 4.1.1.

Internal control

40. 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 basis for qualified opinion, the findings on the annual performance report and the findings on compliance with legislation included in this report.

Leadership

41. Steps taken to ensure the effective oversight of financial and performance reporting, compliance with laws and regulations and related internal controls did not result in fewer significant audit findings. The leadership of the department did not timeously capacitate the finance section to ensure improvement in the controls relating to financial and performance reporting.

Financial and performance management

42. The department did not maintain a timely and proper record management system to ensure that complete, relevant and accurate information was accessible and available to support financial and performance reporting. Due managements‟ slow response in addressing prior year audit findings this contributed to the department‟s inability to implement internal controls over daily and monthly processing of transactions.

Governance

43. The internal audit unit did not review IT related matters and asses IT controls during the financial year under review. This contributed to the department not being able to improve the housing subsidy system which is used as a contract management system and to report on performance.

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PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL

Other reports

Investigations

44 An investigation is being conducted on suspected fraud in the payment of advances to material suppliers during 2010-11 financial years. The investigation commenced in June 2012 and was still ongoing at the time of reporting. 45 An investigation is being conducted on housing subsidies paid to beneficiaries. The investigation commenced in the 2008-09 financial year. This investigation has been extended to include suspected fraud in the payment of advances to material suppliers during the 2010-2011 financial years. The investigation was still in progress at the reporting date.

Bloemfontein

31 July 2015

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13

PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL- FREE STATE HOUSING FUND

Report of the Auditor-General to Free State Legislatureon the Free State Housing Fund

Report on the financial statements

Introduction

1. I have audited the financial statements of the Free State Housing Fund set out on pages 195 to 217, which comprise the statement of financial position as at 31 March 2015, the statement of financial performance, statement of changes in net assets and cash flow statement for the year then ended, as well as the notes, comprising a summary of significant accounting policies and other explanatory information.

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 the South African Standards of Generally Recognised Accounting Practice (SA standards of GRAP) and the requirements of the Public Finance Management Act of South Africa, 1999 (Act No. 1 of 1999) (PFMA), and for such internal control as the accountingofficer 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.

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PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL- FREE STATE HOUSING FUND

Opinion

6. In my opinion, the financial statements present fairly, in all material respects, the financial position of the Free State Housing Fund as at 31 March 2015 and itsfinancial performance and cash flows for the year then ended, in accordance with SA standards of GRAP and the requirements of the PFMA.

Emphasis ofmatters

I draw attention to the matters below. My opinion is not modified in respect of these matters

Significant uncertainties

7. The Free State Housing Fund will discontinue once the housing act No.107 of 1997 is cancelled. Specific timeline pertaining to this matter has not been outlined. As a result the entity is a process of clearing all the assets, accounts, and transactions, but will only be able to close the fund once the housing act has been repealed.

Related parties

8. As disclosed in the annual financial statements, the Free State Housing Fund‟s management decisions are controlled by the Free State department of human settlements. Amount disclosed in payables regarding the related party transactions is R12 167 000.

Report on other legal and regulatory requirements

9. We did not audit performance against predetermined objectives, as the fund is not required to prepare a report on its performance against predetermined objectives. The fund does not fall within the ambit of the PFMA and the entity-specific legislation does not require reporting on performance against predetermined objectives.

Compliance with legislation

10. We did not audit compliance with legislation, as the fund is not required to comply with the PFMA. The fund does not fall within the ambit of the PFMA.

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PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL- FREE STATE HOUSING FUND

Internal control

11. I considered internal control relevant to my audit of the financial statements, programme performance information and compliance with legislation. I did not identify any significant deficiencies in internal control.

Bloemfontein 31 July 2015

127

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13

PART E FINANCIAL INFORMATION: REPORT OF THE AUDITOR GENERAL- ANNUAL FINANCIAL STATEMENTS

1. ANNUAL FINANCIAL STATEMENTS

Table of Contents

Appropriation Statement 129

Notes to the Appropriation Statement 142

Statement of Financial Performance 145

Statement of Financial Position 146

Statement of Changes in Net Assets 147

Cash Flow Statement 148

Notes to the Annual Financial Statements (including Accounting policies) 149

Disclosures Notes to the Annual Financial Statements

Annexures (Unaudited Supplementary Information) 181

128

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

1. Appropriation per programme Appropriation per programme 2014/15 2013/14 Voted funds and Direct charges Adjusted Shifting of Virement Final Actual Variance Expenditure Final Actual Appropriation Funds Appropriation Expenditure as % of Appropriation Expenditure final appropriation

R'000 R'000 R'000 R'000 R'000 R'000 % R'000 R'000 Programme 1. Administration 83 506 - (3 021) 80 485 77 314 3 171 96.1% 68 672 68 257 2. Housing, needs, research and 17 677 - 876 18 553 17 607 946 94.9% 13 194 12 829 Planning 3. Housing Development 1 126 141 - 2 075 1 128 216 1 111 861 16 355 98.6% 1 401 294 1 400 500 4. Housing Asset Management, 894 - 70 964 770 194 79.9% 1 007 175 Property Management TOTAL 1 228 218 - 1 228 218 1 207 552 20 666 98.3% 1 484 167 1 481 761

2014/15 2013/14 Final Actual Final Actual Appropriation Expenditure Appropriation Expenditure Actual amounts per statement of financial performance (total revenue) 1 228 218 1 484 167 ADD Aid assistance - - Prior year unauthorised expenditure approved without funding - - Actual amounts per statement of financial performance (total expenditure) 1 207 552 1 481 761

129

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Appropriation per economic classification 2014/15 2013/14 Adjusted Shifting of Virement Final Actual Variance Expenditure Final Actual Appropriation Funds Appropriation Expenditure as % of final Appropriation expenditure appropriation R'000 R'000 R'000 R'000 R'000 R'000 % R'000 R'000 Current payments 149 699 (541) 149 158 144 316 4 842 96.8% 130 241 128 380 Compensation of employees 108 491 (542) 406 108 355 107 772 583 99.5% 92 624 92 442 Salaries and wages 94 020 1 280 297 95 597 95 114 483 99.5% 80 979 80 797 Social contributions 14 471 (1 822) 109 12 758 12 658 100 99.2% 11 645 11 645 Goods and services 41 158 (406) 40 752 36 515 4 237 89.6% 37 511 35 832 Administrative fees 340 224 - 564 423 141 75.0% 265 193 Advertising 1 043 (679) 114 478 245 233 51.3% 493 457 Minor assets 394 41 - 435 250 185 57.5% 512 50 Audit costs: External 8 200 (499) - 7 701 7 009 692 91.0% 10 069 10 724 Bursaries: Employees 300 (173) - 127 43 84 33.9% - - Catering: Departmental activities 1 449 (458) - 991 734 257 74.1% 1 516 1 510 Communication 1 730 (599) - 1 131 1 084 47 95.8% 1 238 1 241 Computer services 841 2 042 (922) 1 961 1 933 28 98.6% - - Consultants: Business and 552 (497) - 55 54 1 98.2% - - advisory services Legal services 4 041 (1 267) - 2 774 2 767 7 99.7% 4 135 3 252 Contractors 1 095 736 - 1 831 1 724 107 94.2% 554 21 Agency and support / outsourced - 85 - 85 85 1 683 3 231 services Entertainment 88 (52) - 36 10 26 27.8% 31 14 Fleet services 2 500 188 - 2 688 2 688 100.0% 2 167 2 382 Inventory: Clothing material and 68 (56) - 12 1 11 8.3% 17 - supplies Consumable supplies 185 2 - 187 104 83 55.6% 143 47

130

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Transfers and subsidies 1 075 723 - - 1 075 723 1 060 406 15 317 98.6% 1 351 801 1 351 801 Higher education institutions 808 (42) (5) 761 352 409 46.3% - - Households 1 074 915 42 5 1 074 962 1 060 054 14 908 98.6% 1 351 801 1 351 801 Social benefits 20 256 79 355 350 5 98.6% 865 865 Other transfers to households 1 074 895 (214) (74) 1 074 607 1 059 704 14 903 98.6% 1 350 936 1 350 936

131

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Payments for financial assets - - - - 78 (78) - - 201 1 228 218 - - 1 228 218 1 207 552 20 666 98.3% 1 484 167 1 481 761

132

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Economic classification Current payments 82 132 (509) (3 025) 78 598 75 740 2 858 96.4% 67 625 67 191 Compensation of employees 51 626 (542) (2 103) 48 981 48 677 304 99.4% 41 238 41 184 Salaries and wages 43 904 605 (1 670) 42 839 42 590 249 99.4% 35 984 35 930 Social contributions 7 722 (1 147) (433) 6 142 6 087 55 99.1% 5 254 5 254 Goods and services 30 456 33 (922) 29 567 27 035 2 532 91.4% 26 281 25 901 Administrative fees 175 197 - 372 282 90 75.8% 80 66 Advertising 375 (202) - 173 84 89 48.6% - - Minor assets 225 (77) - 148 73 75 49.3% 48 12 Audit costs: External 8 200 (499) - 7 701 7 009 692 91.0% 10 069 10 724 Bursaries: Employees 300 (173) - 127 43 84 33.9% - - Catering: Departmental activities 540 50 - 590 433 157 73.4% 173 131 Communication 1 730 (599) - 1 131 1 084 47 95.8% 1 238 1 241 Computer services 841 2 042 (922) 1 961 1 933 28 98.6% - - Consultants: Business and 552 (497) - 55 54 1 98.2% - - advisory services

133

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Programme 1: Administration 2014/15 2013/14 Adjusted Shifting of Virement Final Actual Variance Expenditure Final Actual Appropriation Funds Appropriation Expenditure as % of final Appropriation expenditure appropriation R'000 R'000 R'000 R'000 R'000 R'000 % R'000 R'000 Legal services 4 041 (1 267) - 2 774 2 767 7 99.7% 3 481 2 752 Contractors 928 425 - 1 353 1 289 64 95.3% 1 526 1 Agency and support / outsourced - 85 - 85 - 85 - 1 680 3 028 services Entertainment 49 (25) - 24 9 15 37.5% 15 8 Fleet services 2 500 188 - 2 688 2 688 - 100.0% 2 167 2 382 Housing ------Inventory: Clothing material and 24 (24) ------supplies Consumable supplies 115 17 - 132 72 60 54.5% 39 34 Consumable: Stationery, printing 1 030 (360) - 670 520 150 77.6% 298 213 and office supplies Operating leases 3 500 593 - 4 093 3 869 224 94.5% 2 965 2 961 Property payments - 1 - 1 - 1 - - - Travel and subsistence 4 526 148 - 4 674 4 205 469 90.0% 2 130 2 066 Training and development 735 (229) - 506 428 78 84.6% 306 242 Operating payments 50 140 - 190 95 95 50.0% 66 39 Venues and facilities 20 99 - 119 98 21 82.4% - 1 Interest and rent on land 50 - - 50 28 22 56.0% 106 106 Interest 50 - - 50 28 22 56.0% 106 106

134

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Payments for capital assets 1 374 509 - 1 883 1 571 312 83.4% 1 009 918 Machinery and equipment 1 374 509 - 1 883 1 571 312 83.4% 1 009 918 Other machinery and equipment 1 374 509 - 1 883 1 571 312 83.4% 1 009 918

Payment for financial assets ------110 Total 83 506 - (3 021) 80 485 77 314 3 171 96.1% 68 672 68 257

135

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Economic classification Current payments 16 125 - 975 17 100 16 617 483 97.2% 11 966 11 818 Compensation of employees 11 588 - 975 12 563 12 545 18 99.9% 8 758 8 741 Salaries and wages 10 683 (365) 890 11 208 11 196 12 99.9% 7 736 7 719 Social contributions 905 365 85 1 355 1 349 6 99.6% 1 022 1 022 Goods and services 4 537 - - 4 537 4 072 465 89.8% 3 208 3 077 Administrative fees 71 (12) - 59 53 6 89.8% 43 37 Advertising 200 (115) - 85 47 38 55.3% 172 166 Minor assets 169 (56) - 113 93 20 82.3% 33 - Catering: Departmental activities 540 (202) - 338 269 69 79.6% 342 367 Legal services ------654 500 Contractors 37 219 - 256 222 34 86.7% Agency and support / outsourced ------3 195 services Entertainment 3 - - 3 - 3 - - - Inventory: Clothing material and 7 accessories Consumable supplies 15 16 - 31 21 10 67.7% 3 3

136

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Programme 2: Housing Needs, Research and Planning 2014/15 2013/14 Adjusted Shifting of Virement Final Actual Variance Expenditure Final Actual Appropriation Funds Appropriation Expenditure as % of final Appropriation expenditure appropriation R'000 R'000 R'000 R'000 R'000 R'000 % R'000 R'000 Consumable: Stationery, printing 295 (108) - 187 151 36 80.7% 154 155 and office supplies Property payments 230 137 - 367 279 88 76.0% 153 153 Transport provided: Departmental ------1 1 activity Travel and subsistence 1 857 (413) - 1 444 1 354 90 93.8% 1 073 973 Training and development ------Operating payments 770 281 - 1 051 1 002 49 95.3% 538 496 Venues and facilities 350 253 - 603 581 22 96.4% 31 31 Rental and hiring ------1 -

Transfers and subsidies 1 070 - (99) 971 551 420 56.7% 827 827 Higher education institutions 808 (42) (5) 761 352 409 46.3% - - Non-profit institutions ------Households 262 42 (94) 210 199 11 94.8% 827 827 Social benefits 20 96 (20) 96 96 - 100.0% 827 827 Other transfers to households 242 (54) (74) 114 103 11 90.4% - -

Payments for capital assets 482 - - 482 439 43 91.1% 401 110 Other machinery and equipment 482 - - 482 439 43 91.1% 401 110

Payment for financial assets ------74 Total 17 677 - 876 18 553 17 607 946 94.9% 13 194 12 829

137

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Programme 3: Housing Development 2014/15 2013/14 Adjusted Shifting of Virement Final Actual Variance Expenditure Final Actual Appropriation Funds Appropriation Expenditure as % of final Appropriation expenditure appropriation R'000 R'000 R'000 R'000 R'000 R'000 % R'000 R'000 Sub programme 1. Housing Development 1 126 141 - 2 075 1 128 216 1 111 861 16 355 98.6% 1 401 294 1 400 500 1 126 141 - 2 075 1 128 216 1 111 861 16 355 98.6% 1 401 294 1 400 500

Economic classification Current payments 50 548 (32) 1 980 52 496 51 189 1 307 97.5% 49 735 49 196 Compensation of employees 44 827 - 1 464 46 291 46 039 252 99.5% 42 539 42 476 Salaries and wages 39 061 1 033 1 007 41 101 40 886 215 99.5% 37 172 37 109 Social contributions 5 766 (1 033) 457 5 190 5 153 37 99.3% 5 367 5 367 Goods and services 5 721 (32) 516 6 205 5 150 1 055 83.0% 7 196 6 720 Administrative fees 94 39 - 133 88 45 66.2% 142 90 Advertising 248 (248) 114 114 114 100.0% 262 239 Minor assets - 174 - 174 84 90 48.3% 431 38 Catering: Departmental activities 369 (306) - 63 32 31 50.8% 1 001 1 012 Contractors 130 92 - 222 213 9 95.9% (980) 12 Agency and support / outsourced ------8 services Entertainment 36 (27) - 9 1 8 11.1% 16 6 Inventory: Clothing material and 44 (32) - 12 1 11 8.3% 10 - supplies Consumable supplies 55 (31) - 24 11 13 45.8% 30 10

138

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Programme 3: Housing Development 2014/15 2013/14 Adjusted Shifting of Virement Final Actual Variance Expenditure Final Actual Appropriation Funds Appropriation Expenditure as % of final Appropriation expenditure appropriation R'000 R'000 R'000 R'000 R'000 R'000 % R'000 R'000 Consumable: Stationery, printing 575 (250) - 325 134 191 41.2% 292 132 and office supplies Operating leases ------12 12 Property payments 50 (19) - 31 20 11 64.5% 166 162 Travel and subsistence 3 920 424 402 4 746 4 214 532 88.8% 4 821 4 164 Operating payments 200 139 - 339 238 101 70.2% 458 322 Venues and facilities - 13 - 13 - 13 - 535 513

Transfers and subsidies 1 074 653 - 95 1 074 748 1 059 852 14 896 98.6% 1 350 936 1 350 936 Households 1 074 653 - 95 1 074 748 1 059 852 14 896 98.6% 1 350 936 1 350 936 Social benefits - 160 95 255 251 4 98.4% - - Other transfers to households 1 074 653 (160) - 1 074 493 1 059 601 14 892 98.6% 1 350 936 1 350 936

Payments for capital assets 940 32 - 972 742 230 76.3% 623 351 Machinery and equipment 940 32 - 972 742 230 76.3% 623 351 Other machinery and equipment 940 32 - 972 742 230 76.3% 623 351

Payments for financial assets - - - - 78 (78) - - 17 Total 1 126 141 - 2 075 1 128 216 1 111 861 16 355 98.6% 1 401 294 1 400 500

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Programme 4: Housing Asset Management & Property Management 2014/15 2013/14 Adjusted Shifting of Virement Final Actual Variance Expenditure Final Actual Appropriation Funds Appropriation Expenditure as % of final Appropriation expenditure appropriation R'000 R'000 R'000 R'000 R'000 R'000 % R'000 R'000 Sub programme 1. Administration 894 - 70 964 770 194 79.9% 1 007 175 894 - 70 964 770 194 79.9% 1 007 175

Economic classification Current payments 894 - 70 964 770 194 79.9% 915 175 Compensation of employees 450 - 70 520 511 9 98.3% 89 41 Salaries and wages 372 7 70 449 442 7 98.4% 87 39 Social contributions 78 (7) - 71 69 2 97.2% 2 2 Goods and services 444 (1) - 443 258 185 58.2% 826 134 Advertising 220 (114) - 106 - 106 - 59 52 Contractors ------8 8 Consumable supplies ------71 - Consumable: Stationery, printing 100 96 - 196 158 38 80.6% 23 21 and office supplies Property payments 124 17 - 141 100 41 70.9% 665 53 Interest and rent on land - 1 - 1 1 - 100.0% - - Interest - 1 - 1 1 100.0% - -

Transfers and subsidies ------

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 APPROPRIATION STATEMENT for the year ended 31 March 2015

Programme 4: Housing Asset Management & Property Management 2014/15 2013/14 Adjusted Shifting of Virement Final Actual Variance Expenditure Final Actual Appropriation Funds Appropriation Expenditure as % of final Appropriation expenditure appropriation R'000 R'000 R'000 R'000 R'000 R'000 % R'000 R'000 Payments for capital assets ------92 - Machinery and equipment ------92 - Other machinery and equipment ------92 -

Payments for financial assets ------Total 894 - 70 964 770 194 79.9% 1 007 175

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NOTES TO THE APPROPRIATION STATEMENT for the year ended 31 March 2015

1. Detail of transfers and subsidies as per Appropriation Act (after Virement):

Detail of these transactions can be viewed in the note on Transfers and subsidies, disclosure notes and Annexure 1 (A-D) to the Annual Financial Statements.

2. Detail of specifically and exclusively appropriated amounts voted (after Virement):

Detail of these transactions can be viewed in note 1 (Annual Appropriation) to the Annual Financial Statements.

3. Detail on payments for financial assets

Detail of these transactions per programme can be viewed in the note on Payments for financial assets to the Annual Financial Statements.

4. Explanations of material variances from Amounts Voted (after Virement):

4.1 Per programme Final Actual Variance Variance as a Appropriation Expenditure R’000 % of Final Appropriation Administration 80 485 77 314 3 171 4% Housing Needs, Research & Planning 18 553 17 606 947 5% Housing Development 1 128 216 1 111 862 16 354 1% Housing Assets Management & Property 964 769 195 20% Management

Explanation of variance: Programme 1 under spent mainly on goods & services by R2, 3 million due to funds made available to SITA to improve IT infrastructure, however SITA completed the work late and submitted the invoice in the new financial year. Machinery & equipment by R0.283 million as the suppliers submitted the invoices late. Programme 2 under spent on goods & services By R0.340 million because the Department received invoices late from suppliers and higher education institutions by R0.409 million due to invoices from the University which were only submitted after 31st March because the program run until the 20th of March 2015. Programme 3 under spent due to a special adjustment budget that was done late in March for the Military Veterans project (R14.8 million). Programme 4 under spent on goods & services also as a result of cost containment measures.

Programme 1: Administration Final Actual Variance Variance as a Appropriation Expenditure R’000 % of Final Appropriation Compensation of employees 48 981 48 677 304 1% Goods and services 29 567 27 034 2 533 9% Interest and rent on land 50 29 21 42% Households (H/H) 4 3 1 25% Machinery and Equipment 1 883 1 571 312 17%

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NOTES TO THE APPROPRIATION STATEMENT for the year ended 31 March 2015

Programme 2: Housing needs, Research Final Actual Variance Variance as a and Planning Appropriation Expenditure R’000 % of Final Appropriation Compensation of employees 12 563 12 544 19 0% Goods and services 4 537 4 072 465 10% Higher Education Institutions 761 352 409 54% Households (H/H) 210 199 11 5% Machinery and Equipment 482 439 43 9%

Explanation of variance: The under spending on higher education institution is due to invoices from the University which only submitted after the 31st March 2015, because the programme ran until the 20th of March 2015. Programme 2 also under spent on goods & services By R0.340 million because the Department received invoices late from suppliers.

Programme 3: Housing Development Final Actual Variance Variance as a Appropriation Expenditure R’000 % of Final Appropriation Compensation of employees 46 291 46 039 252 1% Goods and services 6 205 5 150 1 055 17% Households (H/H) 1 074 748 1 059 853 14 895 1% Machinery and Equipment 972 742 230 24% Payment for Financial Assets - 78 78 -

Explanation of variance: Programme 3 under spent on goods & services by an amount of R0, 895 million as well as on machinery & equipment by an amount of R0, 207 million because of the cost containment measures that was implemented by Provincial Treasury in the 2014/2015 financial year. Programme 3 also under spent due to a special adjustment budget that was done late in March for the Military Veterans project (R14.8 million).

Programme 4: Housing Asset Final Actual Variance Variance as a Management, Property Management Appropriation Expenditure R’000 % of Final Appropriation Compensation of employees 520 510 10 2% Goods and services 443 258 185 42% Interest and rent on land 1 1 - -

Explanation of variance: Programme 4 under spent on goods & services also as a result of cost containment measures.

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NOTES TO THE APPROPRIATION STATEMENT for the year ended 31 March 2015

4.2 Per economic classification: Final Actual Variance Variance as a Appropriation Expenditure % of Final Appropriation R’000 R’000 R’000 R’000 Current expenditure Compensation of employees 108 355 107 772 583 1% Goods and services 40 752 36 514 4 238 10% Interest and rent on land 51 29 22 43% Transfers and subsidies Higher education institutions 761 352 409 54% Households 1 074 962 1 060 055 14 907 1% Payments for capital assets Machinery and equipment 3 337 2 752 585 18% Payments for financial assets - 78 - -

Explanation of variance: The under spent mainly on goods & services by R 3.6 million due to funds made available to SITA to improve IT Infrastructure, however SITA completed the work late and submitted the invoice in the new financial year and machinery and equipment by R 0.534 million as the suppliers submitted the invoices late . The transfers and subsidies also under spent on higher education institutions by R 0.409 million due to invoices from the University which only submitted after the 31st of March, because the programme ran until the 20th of March 2015. Programme 3 also under spent due to a special adjustment budget that was done late in March for the Military Veterans project (R14.8 million).

Final Actual Variance Variance as a 4.3 Per conditional grant Appropriation Expenditure % of Final Appropriation R’000 R’000 R’000 % Human Settlements Development Grant Individual Housing Subsidies 8 047 8 045 2 0% Rectification of RDP stock 1994-2002 2 400 2 400 0 0% Rectification of Hous Stoc Pre 1994 96 498 96 488 10 0% Operational Capital Budget 33 571 33 570 1 0% Unblocked of Blocked Projects 14 783 14 766 17 0% Procurement of Land 20 000 20 000 0 0% NHBRC Enrolment of land 36 289 36 289 0 0% Integrate Resid Den Prog: Phase 1 99 513 99 495 18 0% Integrate Resid Den Prog: Phase 4 633 082 618 250 14 832 2% People Housing Process 10 731 10 731 0 0% Emergency Housing Assistance 11 191 11 188 3 0% Institutional Subsidies 28 189 28 188 1 0% Community Residential Unit 82 348 82 346 2 0%

Explanation of variance: The Human Settlements Development Grant under spend on objective Integrate Residential Development Programme: Phase 4 because of the Special Adjustment budget that was done late in March 2015 for the Military Veterans project.

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STATEMENT OF FINANCIAL PERFORMANCE for the year ended 31 March 2015

Note 2014/15 2013/14 R'000 R'000 REVENUE Annual appropriation 1 1 228 218 1 484 167

TOTAL REVENUE 1 228 218 1 484 167

EXPENDITURE Current expenditure Compensation of employees 3 107 772 92 442 Goods and services 4 36 515 35 832 Interest and rent on land 5 29 106 Total current expenditure 144 316 128 380

Transfers and subsidies Transfers and subsidies 7 1 060 406 1 351 801 Total transfers and subsidies 1 060 406 1 351 801

Expenditure for capital assets Tangible assets 8 2 752 1 379 Total expenditure for capital assets 2 752 1 379

Payments for financial assets 6 78 201

TOTAL EXPENDITURE 1 207 552 1 481 761

SURPLUS FOR THE YEAR 20 666 2 406

Reconciliation of Net Surplus for the year

Voted funds 20 666 2 406 Annual appropriation 5 779 2 406 Conditional grants 14 886 - SURPLUS FOR THE YEAR 20 666 2 406

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 STATEMENT OF FINANCIAL POSITION for the year ended 31 March 2015

Note 2014/15 2013/14 R'000 R'000 ASSETS

Current assets 25 215 8 013 Unauthorised expenditure 9 - 29 Cash and cash equivalents 10 17 386 20 Prepayments and advances 11 27 238 Receivables 12 7 802 7 726

Non-current assets 86 68 Receivables 12 86 68

TOTAL ASSETS 25 301 8 081

LIABILITIES

Current liabilities 22 687 5 374 Voted funds to be surrendered to the Revenue Fund 13 20 666 2 406 Departmental revenue and NRF Receipts to be surrendered 14 10 - to the Revenue Fund Bank overdraft 15 - 1 140 Payables 16 2 011 1 828

TOTAL LIABILITIES 22 687 5 374

NET ASSETS 2 614 2 707

Represented by: Recoverable revenue 2 614 2 707

TOTAL 2 614 2 707

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 STATEMENT OF CHANGES IN NET ASSETS for the year ended 31 March 2015

2014/15 2013/14 Recoverable revenue R'000 R'000 Opening balance 2 707 2 893 Transfers: (93) (186) Debts recovered (included in Departmental receipts) (267) (207) Debts raised 174 21 Closing balance 2 614 2 707

TOTAL 2 614 2 707

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 CASH FLOW STATEMENT for the year ended 31 March 2015

Note 2014/15 2013/14 R'000 R’000 CASH FLOWS FROM OPERATING ACTIVITIES Receipts 1 229 374 1 484 822 Annual appropriated funds received 1.1 1 228 218 1 484 167 Departmental revenue received 2 1 149 641 Interest received 2.2 7 14

Net (increase)/decrease in working capital 329 301 Surrendered to Revenue Fund (3 552) (21 742) Current payments (144 287) (128 274) Interest paid 5 (29) (106) Payments for financial assets (78) (201) Transfers and subsidies paid (1 060 406) (1 351 801) Net cash flow available from operating activities 17 21 351 (17 001)

CASH FLOWS FROM INVESTING ACTIVITIES Payments for capital assets 8 (2 752) (1 379) Net cash flows from investing activities (2 752) (1 379)

CASH FLOWS FROM FINANCING ACTIVITIES Increase/(decrease) in net assets (93) (186) Net cash flows from financing activities (93) (186)

Net increase/(decrease) in cash and cash equivalents 18 506 (18 566)

Cash and cash equivalents at beginning of period (1 120) 17 446

Cash and cash equivalents at end of period 18 17 386 (1 120)

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Summary of significant accounting policies The financial statements have been prepared in accordance with the following policies, which have been applied consistently in all material aspects, unless otherwise indicated. The historical cost convention has been used, except where otherwise indicated. Management has used assessments and estimates in preparing the annual financial statements. These are based on the best information available at the time of preparation. Where appropriate and meaningful, additional information has been disclosed to enhance the usefulness of the financial statements and to comply with the statutory requirements of the Public Finance Management Act (PFMA), Act 1 of 1999 (as amended by Act 29 of 1999), and the Treasury Regulations issued in terms of the PFMA and the annual Division of Revenue Act.

1 Basis of preparation The financial statements have been fairly presented and are prepared in accordance with the Modified Cash Standard.

2 Going concern The financial statements have been prepared on a going concern basis.

3 Presentation currency Amounts have been presented in the currency of the South African Rand (R) which is also the functional currency of the Department.

4 Rounding Unless otherwise stated financial figures have been rounded to the nearest one thousand Rand (R‟000).

5 Comparative information 5.1 Prior period comparative information Prior period comparative information has been presented in the current year‟s financial statements. Where necessary figures included in the prior period financial statements have been reclassified to ensure that the format in which the information is presented is consistent

with the format of the current year‟s financial statements.

Current year comparison with budget 5.2 A comparison between the approved, final budget and actual amounts for each programme and economic classification is included in the appropriation statement.

6 Revenue

6.1 Appropriated funds Appropriated funds comprises of Departmental allocations as well as direct charges against the revenue fund (i.e. statutory appropriation). 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. The net amount of any appropriated funds due to the relevant revenue fund at the reporting date is recognised as a payable in the statement of financial position.

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

6.2 Departmental revenue Departmental revenue is recognised in the statement of financial performance when received and is subsequently paid into the relevant revenue fund, unless stated otherwise. Any amount owing to the relevant revenue fund at the reporting date is recognised as a payable in the statement of financial position.

6.3 Accrued Departmental revenue Accruals in respect of Departmental revenue (excluding tax revenue) are recorded in the notes to the financial statements when:  it is probable that the economic benefits or service potential associated with the transaction will flow to the Department; and the amount of revenue can be measured reliably. The accrued revenue is measured at the fair value of the consideration receivable. Accrued tax revenue (and related interest and / penalties) is measured at amounts receivable from collecting agents.

7 Expenditure

7.1 Compensation of employees

7.1.1 Salaries and wages Salaries and wages are recognised in the statement of financial performance on the date of payment.

7.1.2 Social contributions Social contributions made by the Department in respect of current employees are recognised in the statement of financial performance on the date of payment. Social contributions made by the Department in respect of ex-employees are classified as transfers to households in the statement of financial performance on the date of payment.

7.2 Other expenditure Other expenditure (such as goods and services, transfers and subsidies and payments for capital assets) is recognised in the statement of financial performance on the date of payment. The expense is classified as a capital expense if the total consideration paid is more than the capitalisation threshold and the expense meets the requirements of capital assets as per the reporting standards.

The Department also transfers funds to implementing agencies to assist the Department to fulfil its mandate. Due to this there is an element of unspent funds relating to transfers and subsidies that is disclosed as such.

7.3 Accrued expenditure payable Accrued expenditure payable is recorded in the notes to the financial statements when the goods are received or, in the case of services, when they are rendered to the Department and

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the payment for the goods or services had not taken place as at year end. Accrued expenditure payable is measured at cost.

7.4 Leases

7.4.1 Operating leases Operating lease payments made during the reporting period are recognised as current expenditure in the statement of financial performance on the date of payment. The operating lease commitments are recorded in the notes to the financial statements and are been reviewed on a quarterly basis when the Department have to submit their Interim Financial Statements.

7.4.2 Finance leases Finance lease payments made during the reporting period are recognised as capital expenditure in the statement of financial performance on the date of payment. The finance lease commitments are recorded in the notes to the financial statements and are not apportioned between the capital and interest portions. Finance lease assets acquired at the end of the lease term are recorded and measured at the lower of:  cost, being the fair value of the asset; or  the sum of the minimum lease payments made, including any payments made to acquire ownership at the end of the lease term, excluding interest.

8 Cash and cash equivalents Cash and cash equivalents are stated at cost in the statement of financial position. Bank overdrafts are shown separately on the face of the statement of financial position. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held, other short-term highly liquid investments and bank overdrafts.

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

10 Loans and receivables Loans and receivables are recognised in the statement of financial position at cost plus accrued interest, where interest is charged, less amounts already settled or written-off.

11 Investments Investments are recognised in the statement of financial position at cost.

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12 Impairment of financial assets Where there is an indication of impairment of a financial asset, an estimation of the reduction in the recorded carrying value, to reflect the best estimate of the amount of the future economic benefits expected to be received from that asset, is recorded in the notes to the financial statements.

13 Payables Loans and receivables are recognised in the statement of financial position at cost.

14 Capital Assets

14.1 Immovable capital assets Immovable capital assets are initially recorded in the notes to the financial statements at cost. Immovable capital assets acquired through a non-exchange transaction is measured at fair value as at the date of acquisition. Where the cost of immovable capital assets cannot be determined accurately, the immovable capital assets are measured at R1 unless the fair value of the asset has been reliably estimated, in which case the fair value is used. All assets acquired prior to 1 April 2005 may be recorded at R1. Immovable capital assets are subsequently carried at cost and are not subject to depreciation or impairment. Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project unless the immovable asset is recorded by another Department in which case the completed project costs are transferred to that Department.

14.2 Movable capital assets Movable capital assets are initially recorded in the notes to the financial statements at cost. Movable capital assets acquired through a non-exchange transaction is measured at fair value as at the date of acquisition. Where the cost of movable capital assets cannot be determined accurately, the movable capital assets are measured at fair value and where fair value cannot be determined; the movable assets are measured at R1. All assets acquired prior to 1 April 2005 may be recorded at R1. Movable capital assets are subsequently carried at cost and are not subject to depreciation or impairment. Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project unless the movable asset is recorded by another Department/entity in which case the completed project costs are transferred to that Department.

14.3 Intangible assets Intangible assets are initially recorded in the notes to the financial statements at cost. Intangible assets acquired through a non-exchange transaction are measured at fair value as at the date of acquisition. Internally generated intangible assets are recorded in the notes to the financial statements when the Department commences the development phase of the project. Where the cost of intangible assets cannot be determined accurately, the intangible capital assets are measured at fair value and where fair value cannot be determined; the intangible assets are measured at R1. All assets acquired prior to 1 April 2005 are recorded at R1. Intangible assets are subsequently carried at cost and are not subject to depreciation or impairment.

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Subsequent expenditure that is of a capital nature is added to the cost of the asset at the end of the capital project unless the intangible asset is recorded by another Department/entity in which case the completed project costs are transferred to that Department.

15 Provisions and Contingents

15.1 Provisions Provisions are recorded in the notes to the financial statements when there is a present legal or constructive obligation to forfeit economic benefits as a result of events in the past and 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 of the obligation can be made. The provision is measured as the best estimate of the funds required to settle the present obligation at the reporting date.

15.2 Contingent liabilities Contingent liabilities are recorded in the notes to the financial statements when there is 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 within the control of the Department or when there is a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation or the amount of the obligation cannot be measured reliably

15.3 Contingent assets 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 Department

15.4 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 Department will discharge its responsibilities thereby incurring future expenditure that will result in the outflow of cash

16 Unauthorised expenditure Unauthorised expenditure is recognised in the statement of financial position until such time as the expenditure is either:  approved by Parliament or the Provincial Legislature with funding and the related funds are received; or  approved by Parliament or the Provincial Legislature without funding and is written off against the appropriation in the statement of financial performance; or  transferred to receivables for recovery. Unauthorised expenditure is measured at the amount of the confirmed unauthorised expenditure.

17 Fruitless and wasteful expenditure Fruitless and wasteful expenditure is recorded in the notes to the financial statements when

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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 de-recognised when settled or subsequently written-off as irrecoverable.

18 Irregular expenditure Irregular expenditure is recorded in the notes to the financial statements when confirmed. The amount recorded is equal to the total value of the irregularity unless it is impracticable to determine, in which case reasons therefore are provided in the note. Irregular expenditure is removed from the note when it is either condoned by the relevant authority or transferred to receivables for recovery. 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.

19 Changes in accounting policies, accounting estimates and errors Where there has been a change in accounting policy in the current year, the adjustment is made retrospectively as far as is practicable and the prior year comparatives are restated accordingly. 20 Prior period errors Where material accounting errors, which relate to prior periods, have been identified in the current year, the correction is made retrospectively as far as is practicable and the prior year comparatives are restated accordingly and the note related to that was completed as well as the narrative. 21 Non-adjusting events after the reporting date The Department will disclose 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.

22 Recoverable revenue

Amounts are recognised as recoverable revenue when a payment made in a previous financial year becomes recoverable from a debtor in the current financial year. Amounts are transferred to the Provincial Revenue Fund when recovered or are transferred to the statement of financial performance when written-off.

23 Related party transactions

A related party transaction is a transfer of resources, services or obligations between the reporting entity and a related party. Related party transactions are recorded in the notes to the financial statements when the transaction is not at arm‟s length. The Housing Fund is a related party to the Department of Human Settlements and this related party transaction will no longer be applicable if and when the Housing Fund finally dissolves once all transfers took place into

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the beneficiaries‟ name.

24 Key management personnel Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Department. All officials from level 14 and above are deemed to be key management personnel. Employees on level 13 or below acting for key management of level 14 and above during the financial year are also included in the note. Remuneration paid to key management personnel includes short-term employee benefits, post-employee benefits, other long term employee benefits and termination benefits. Remuneration paid to close family members of key management personnel is also disclosed in the note.

25 Agent-principal arrangements The Department is acting as a principal when it has the power to exercise beneficial control over an activity. The Department has beneficial control when it has both the power to direct the activity, and the ability to benefit from that power. “Benefits” can consist of economic benefits, service potential or both.

Where the Department acts as a principal it discloses the following in the notes to the financial statements:  the total payments made to its agents (where applicable) during the period; and  an explanation about the nature, circumstances and terms relating to the arrangements.

1. Annual appropriation

1.1 Annual appropriation Included are funds appropriated in terms of the Appropriation Act (and the Adjustments Appropriation Act) for National Departments (Voted funds) and Provincial Departments: 2014/15 Final Actual Funds Funds not Appropriation Appropriation Received requested/ received not received Programmes: R’000 R’000 R’000 R’000 Administration 80 485 80 485 - 68 672 Housing Needs, Research and Planning 18 553 18 553 - 13 194 Housing Development 1 128 216 1 128 216 - 1 401 294 Housing Asset Management, Property 964 964 - 1 007 Management Total 1 228 218 1 228 218 - 1 484 167

All funds requested were received during the financial year.

1.2 Conditional grants Note 2014/15 2013/14 R’000 R’000

Total grants received 33 1 078 642 1 350 936 Provincial grants included in Total Grants received - -

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

2 Departmental Revenue Note 2014/15 2013/14 R’000 R’000

Sales of goods and services other than capital assets 2.1 425 284 Interest, dividends and rent on land 2.2 7 14 Transactions in financial assets and liabilities 2.3 724 357 Total revenue collected 1 156 655 Less: Own revenue included in appropriation 14 1 156 655 Departmental revenue collected - -

2.1 Sales of goods and services other than capital assets Note 2014/15 2013/14 2 R’000 R’000

Sales of goods and services produced by the Department 425 284 Administrative fees 425 284 Total 425 284

2.2 Interest, dividends and rent on land Note 2014/15 2013/14 2 R’000 R’000

Interest 7 14 Total 7 14

2.3 Transactions in financial assets and liabilities Note 2014/15 2013/14 2 R’000 R’000

Other Receipts including Recoverable Revenue 724 357 Total 724 357

3. Compensation of employees

3.1 Salaries and Wages 2014/15 2013/14 R’000 R’000

Basic salary 74 001 63 015 Performance award 2 994 2 314 Service Based 198 247 Compensative/circumstantial 1 205 1 060 Other non-pensionable allowances 16 716 14 167 Total 95 114 80 803

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

3.2 Social contributions 2014/15 2013/14 5.1 R’000 R’000 Employer contributions Pension 8 695 7 690 Medical 3 944 3 933 Bargaining council 19 16 Total 12 658 11 639

Total compensation of employees 107 772 92 442

Average number of employees 292 249

4. Goods and services Note 2014/15 2013/14 R’000 R’000

Administrative fees 423 193 Advertising 244 457 Minor assets 4.1 250 50 Bursaries (employees) 43 - Catering 733 1 510 Communication 1 084 1 241 Computer services 4.2 1 933 - Consultants: Business and advisory services 54 - Legal services 2 767 3 252 Contractors 1 725 21 Agency and support / outsourced services - 3 231 Entertainment 11 14 Audit cost – external 4.3 7 009 10 724 Fleet services 2 688 2 382 Consumables 4.4 1 069 568 Operating leases 3 869 2 973 Property payments 4.5 399 368 Transport provided as part of the Departmental activities - 1 Travel and subsistence 4.6 9 771 7 203 Venues and facilities 679 545 Training and development 428 242 Other operating expenditure 4.7 1 336 857 Total 36 515 35 832

4.1 Minor assets Note 2014/15 2013/14 4 R’000 R’000 Tangible assets Machinery and equipment 250 50 Total 250 50

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

4.2 Computer services Note 2014/15 2013/14 4 R’000 R’000 6.1 SITA computer services 1 933 - Total 1 933 -

4.3 Audit cost - External Note 2014/15 2013/14 4 R’000 R’000

Regularity audits 5 847 8 605 Investigations 1 162 2 119 Total 7 009 10 724

4.4 Consumables Note 2014/15 2013/14 4 R’000 R’000

Consumable supplies 106 47 Uniform and clothing 2 15 Household supplies 45 31 Building material and supplies 48 - Communication accessories 3 - Other consumables 8 1 Stationery, printing and office supplies 963 521 Total 1 069 568

4.5 Property payments Note 2014/15 2013/14 4 R’000 R’000

Municipal services 120 69 Other 279 299 Total 399 368

4.6 Travel and subsistence Note 2014/15 2013/14 4 R’000 R’000

Local 8 832 6 571 Foreign 939 632 Total 9 771 7 203

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4.7 Other operating expenditure Note 2014/15 2013/14 4 R’000 R’000

Resettlement costs 75 42 Other 1 261 815 Total 1 336 857

5. Interest and rent on land Note 2014/15 2013/14 R’000 R’000

Interest paid 29 106 Total 29 106

6. Payments for financial assets Note 2014/15 2013/14 R’000 R’000

Other material losses written off 6.1 - 104 Debts written off 6.2 78 97 Total 78 201

6.1 Other material losses

Other material losses written off Note 2014/15 2013/14 6 R’000 R’000 Nature of losses Settlement of motor vehicle accident - 104 Total - 104

6.2 Debts written off Note 2014/15 2013/14 6 R’000 R’000 Nature of debts written off Staff Debt - 97 Ex Employee debt 72 - Supplier debt 6 - Total debt written off 78 97

7. Transfers and subsidies 2014/15 2013/14 R’000 R’000

Higher education institutions Annex 1A 352 -

159

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Households Annex 1B 1 060 054 1 351 801 Total 1 060 406 1 351 801

Unspent funds transferred to the above beneficiaries 130 246 619 853

2014/15

Unspent amount included in transfers to households is R21 634 104 which were transferred to the Housing Development Agency for the procurement of land.

Unspent amount included in transfers to households is R12 471 512 which was transferred to the Free State Development Corporation for the procurement of land.

Unspent amount included in transfers to households is R 4 581 540 which was transferred to the Mangaung Support of Housing Fund for the procurement of land.

Unspent amount included in transfers to households is R34 151 308 which was transferred to Stefanutti Stocks for the implementation of a social housing project

Unspent amount included in transfers to households is R143 957 which was transferred to Utshani Fund for the implementation of a social housing project.

Unspent amount included in transfers to households is R27 635 763 which was transferred to Rossouw and Conradie/ Kentha Developers for the implementation of a social housing project

Unspent amount included in transfers to households is R14 346 895 which was transferred to Coreland Property Development Company for the implementation of a social housing project

Unspent amount included in transfers to households is R5 000 000 which was transferred to Eskom for the implementation of a social housing project

Unspent amount included in transfers to households is R181 507 which was transferred to Maluti Batlokoa Project Trust Fund for the implementation of a social housing project

Unspent amount included in transfers to households is R10 031 865 which was transferred to Mafuri Turnkey Accelerated Construction for the implementation of a social housing project

Unspent amount included in transfers to households is R67 609.75 which was transferred for Maphodi - Springfontein for the implementation of a social housing project.

2013/2014

Unspent amount included in transfers to households is R 230 000 000 which was transferred to Bloem Water to provide support and expedite the delivery of water and sanitation services to beneficiaries within Free State Province

Unspent amount included in transfers to households is R 101 639 940 which was transferred to the Housing Development Agency for the procurement of land

160

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Unspent amount included in transfers to households is R 51 473 508 which was transferred to the Free State Development Corporation for the procurement of land.

Unspent amount included in transfers to households is R 71 872 610 which was transferred to the Mangaung Metropolitan Municipality for the support of housing fund allocation.

Unspent amount included in transfers to households is R 57 014 030 which was transferred to Stefanutti Stocks for the implementation of a social housing project.

Unspent amount included in transfers to households is R 1 000 which was transferred to Social Housing Regulatory Authority for the implementation of social housing projects.

Unspent amount included in transfers to households is R 176 998 which was transferred to Utshani Fund for the implementation of a social housing project.

Unspent amount included in transfers to households is R 43 548 884 which was transferred to Rossouw and Conradie / Kentha Developers for the implementation of a social housing project.

Unspent amount included in transfers to households is R 93 975 which was transferred to Maluti Batlokoa Project Trust Fund for the implementation of a social housing project.

'Unspent amount included in transfers to households is R 63 930 670 which was transferred to Coreland Property Development Company for the implementation of a social housing project.

8. Expenditure for capital assets Note 2014/15 2013/14 R’000 R’000

Tangible assets 2 752 1 379 Machinery and equipment 29.1 2 752 1 379

Total 2 752 1 379

8.1 Analysis of funds utilised to acquire capital assets – 2014/15 Voted funds Aid Total assistance R’000 R’000 R’000

Tangible assets 2 752 2 752 Machinery and equipment 2 752 - 2 752

Total 2 752 - 2 752

8.2 Analysis of funds utilised to acquire capital assets – 2013/14 Voted funds Aid Total assistance R’000 R’000 R’000

Tangible assets 1 379 - 1 379

161

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Machinery and equipment 1 379 - 1 379

Total 1 379 - 1 379

8.3 Finance lease expenditure included in Expenditure for capital assets 2014/15 2013/14 R’000 R’000 Tangible assets Machinery and equipment 804 780

Total 804 780

9. Unauthorised expenditure

9.1 Reconciliation of unauthorised expenditure 2014/15 2013/14 R’000 R’000

Opening balance 29 29 Less: Amounts approved by Parliament/Legislature with (29) - funding Unauthorised expenditure awaiting authorisation / written off - 29

9.2 Analysis of unauthorised expenditure awaiting authorisation per economic classification 2014/15 2013/14 R’000 R’000

Current - 29 Total - 29 9.3 Analysis of unauthorised expenditure awaiting authorisation per type 2014/15 2013/14 R’000 R’000

Unauthorised expenditure incurred not in accordance with - 29 the purpose of the vote or main division Total - 29

10. Cash and cash equivalents 2014/15 2013/14 R’000 R’000

Consolidated Paymaster General Account 17 366 - Cash on hand 20 20 Total 17 386 20

162

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

There are no significant cash and cash equivalent balances held by the Department that are not available for use.

There are no undrawn borrowing facilities available for future operating activities or to settle capital commitments.

11. Prepayments and advances 2014/15 2013/14 R’000 R’000

Travel and subsistence 27 238 Total 27 238

12. Receivables 2014/15 2013/14 Less than One to Older than one year three years three Total Total Note years R’000 R’000 R’000 R’000 R’000

Claims recoverable 12.1 105 14 495 614 510 Annex 4 Staff debt 12.2 136 119 - 254 357 Other debtors 12.3 278 4 009 2 732 7 020 6 927 Total 519 4 142 3 227 7 888 7 794

12.1 Claims recoverable Note 2014/15 2013/14 12 R’000 R’000

National Departments 14 14 Provincial Departments 105 - Public entities - 1 Local governments 495 495 Total 614 510

12.2.1 Staff debt Note 2014/15 2013/14 12 R’000 R’000

Salary Overpayments 20 87 Communication Debt 185 213 Tax Debt 1 34 Breach of Contract 17 15 Leave Without Pay 31 8 Total 254 357

163

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

12.3 Other debtors Note 2014/15 2013/14 12 R’000 R’000

Supplier Debt 7 020 6 927 Total 7 020 6 927 12.4 Impairment of receivables Note 2014/15 2013/14 12 R’000 R’000

Estimate of impairment of receivables 3 227 1 202 Total 3 227 1 202

13. Voted funds to be surrendered to the Revenue Fund 2014/15 2013/14 R’000 R’000

Opening balance 2 406 21 050 Transfer from statement of financial performance 20 666 2 406 Paid during the year (2 406) (21 050) Closing balance 20 666 2 406 14. Departmental revenue and NRF Receipts to be surrendered to the Revenue Fund 2014/15 2013/14 R’000 R’000

Opening balance - 37 Own revenue included in appropriation 1 156 655 Paid during the year (1 146) (692) Closing balance 10 - 15. Bank Overdraft 2014/15 2013/14 R’000 R’000

Consolidated Paymaster General Account - 1 140 Total - 1 140 16. Payables – current Note 2014/15 2013/14 R’000 R’000

Other payables 16.1 1 596 1 581 Clearing accounts 415 247 Total 2 011 1 828

164

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

16.1 Other payables Note 2014/15 2013/14 16 R’000 R’000

Housing Fund 1 596 1 581 Total 1 596 1 581 Salary Income Tax and Salary Pension Fund clearing accounts were previously disclosed under other payables. Refer to note 16.2 where it is currently disclosed. Refer to note 32 for more information.

16.2 Clearing accounts Note 2014/15 2013/14 16 R’000 R’000

Salary Income Tax 411 233 Salary Pension Fund 4 14 Total 415 247

Salary Income Tax and Salary Pension Fund clearing accounts were previously disclosed under other payables. Refer to note 32 for more information. 17 Net cash flow available from operating activities 2014/15 2013/14 R’000 R’000

Net surplus/(deficit) as per Statement of Financial 20 666 2 406 Performance Add back non cash/cash movements not deemed operating 685 (19 407) activities (Increase)/decrease in receivables – current (94) 192 (Increase)/decrease in prepayments and advances 211 (63) (Increase)/decrease in other current assets 29 - Increase/(decrease) in payables – current 183 172 Expenditure on capital assets 2 752 1 379 Surrenders to Revenue Fund (3 552) (21 742) Own revenue included in appropriation 1 156 655 Net cash flow generated by operating activities 21 351 (17 001)

18 Reconciliation of cash and cash equivalents for cash flow purposes 2014/15 2013/14 R’000 R’000

Consolidated Paymaster General account 17 366 (1 140) Cash on hand 20 20 Total 17 386 (1 120)

165

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

19 Contingent liabilities and contingent assets

19.1 Contingent liabilities Note 2014/15 2013/14 R’000 R’000 Liable to Claims against the Department Annex 98 495 68 571 2 Total 98 495 68 571

The amount for contingent liabilities is dependent on the outcome of the court cases occurring in the future, which will only be finalised in the future.

The possibility of reimbursement will only be certain upon completion of the court cases.

The comparative information was restated. Refer to note 32 for more information.

20. Commitments 2014/15 2013/14 R’000 R’000 Current expenditure Approved and contracted 2 005 4 145 2 005 4 145 Capital expenditure Approved and contracted 2 015 933 506 765 Approved but not yet contracted 14 886 3 083 2 030 819 509 848 Total Commitments 2 032 824 513 993

Commitments to the value of R2 024 546‟ are in respect of a period longer than a year.

The comparative information was restated. Refer to note 32 for more information. 21. Accruals and payables not recognised 2014/15 2013/14 R’000 R’000 Listed by economic classification 30 Days 30+ Days Total Total Other 188 - 188 - Goods and services 4 769 2 433 7 202 6 228 Transfers and subsidies 319 469 629 968 949 437 612 193 Capital Assets 33 - 33 29 Total 324 459 632 401 956 860 618 450

2014/15 2013/14 R’000 R’000 Listed by programme level Administration 6 978 5 720 Housing Needs, Research and Planning 216 331

166

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Housing Development 949 646 612 365 Housing Asset Management and Property Management 20 34 Total 956 860 618 450

“Other Employee Benefits” to the amount of R‟519 is included in accruals. Previously these amounts relating to Employee Benefits (which includes payments such as S&T allowances, acting allowances, overtime etc.) were disclosed in Note 22.

The comparative information was restated. Refer to note 32 for more information.

The amount above relates to ongoing investigations of advances to material suppliers. However, due to the nature of the ongoing investigations the department is in the process of determining the full extent thereof.

Note 2014/15 2013/14 R’000 R’000

Confirmed balances with other Departments Annex 4 1 321 256 Confirmed balances with other government entities Annex 4 562 709 Total 1 883 965

22. Employee benefits 2014/15 2013/14 R’000 R’000

Leave entitlement 4 830 4 834 Service bonus (Thirteenth cheque) 2 675 2 523 Performance awards 3 909 2 994 Capped leave commitments 2 223 2 635 Other (Long Services Awards) 53 66 Total 13 690 13 052

There is a long term portion of the long services awards. The provisioning on the long service awards provision disclosed above does not include the long term portion of the long service awards.

The comparative information was restated. Refer to note 32 for more information.

23. Lease commitments

23.1 Operating leases expenditure

2014/15 Specialised Land Buildings Machinery Total military and other and equipment fixed equipment structures R’000 R’000 R’000 R’000 R’000

Not later than 1 year - - - 2 099 2 099

167

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Later than 1 year and not later - - - 4 126 4 126 than 5 years Total lease commitments - - - 6 225 6 225

2013/14 Specialised Land Buildings Machinery Total military and other and equipment fixed equipment structures R’000 R’000 R’000 R’000 R’000

Not later than 1 year - - - 2 050 2 050 Later than 1 year and not later - - - 5 570 5 570 than 5 years Total lease commitments - - - 7 620 7 620

The Department has entered into a SLA with Fleet Management for the provision of vehicles. This is an operating lease.

No assets are sub-leased by the Department.

There were no sale and lease back agreements entered into by the Department.

23.2 Finance leases expenditure

2014/15 Specialised Land Buildings Machinery Total military and other and equipment fixed equipment structures R’000 R’000 R’000 R’000 R’000

Not later than 1 year - - - 718 718 Later than 1 year and not later - - - 232 232 than 5 years Total lease commitments - - - 950 950

2013/14 Specialised Land Buildings Machinery Total military and other and equipment fixed equipment structures R’000 R’000 R’000 R’000 R’000

Not later than 1 year - - - 651 651 Later than 1 year and not later - - - 270 270 than 5 years Total lease commitments - - - 921 921

168

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

The Department rents 4 photocopiers over a period of 36 months which will only expire during 2015 and 2017 respectively. The Department rents 20 cell phones from MTN over a fixed term period of 24 months. The Department rents 143 cell phones from Vodacom over a fixed term period of 24 months. The Department rents 21 cell phones from Cell C over a fixed term period of 24 months.

No assets are sub-leased by the Department.

The Department does not have any renewal or purchase options in any of its lease agreements. There are also no escalation clauses in the lease agreements and the fees are standard/fixed for the term of agreement.

There are no restrictions imposed on the Department through any lease agreement.

There were no sale and lease back agreements entered into by the Department.

The comparative information was restated. Refer to note 32 for more information.

24. Accrued Departmental revenue 2014/15 2013/14 R’000 R’000

Transfers received (incl. conditional grants to be repaid by 559 480 559 480 provincial Departments) Total 559 480 559 480

The comparative information was restated. Refer to note 32 for more information.

24.1 Analysis of accrued departmental revenue 2014/15 2013/14 R’000 R’000

Opening balance 559 480 101 838 Less: Amounts received - - Add: Amounts recognised - 457 642 Less Amounts written off or reversed as irrecoverable - Closing balance 559 480 559 480

169

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

25. Irregular expenditure

25.1 Reconciliation of irregular expenditure 2014/15 2013/14 R’000 R’000

Opening balance 3 596 445 2 737 511 Add: Irregular expenditure – relating to prior year - - Add: Irregular expenditure – relating to current year 980 965 858 934 Less Amounts not condoned and not recoverable (1 637 940) - Closing balance 2 939 470 3 596 445 Analysis of awaiting condensation per age classification Current year 980 965 858 934 Prior years 1 958 505 2 737 511 Total 2 939 470 3 596 445

The prior year irregular expenditure increased with R1 218 040 based on the conclusion reached on the items included in the current year audit and which have a prior year impact.

The comparative information was restated. Refer to note 25.5 for more information.

25.2 Details of irregular expenditure – current year

Incident Disciplinary steps 2014/15 taken/criminal proceedings R’000

Sufficient number of quotation not obtained (< R30 000) None 3 813 Sufficient number of quotations not always obtained and None 4 059 not always fully met PPFA requirement (R30 000 – R500 000) Payment of acting allowance None 8 Housing grant – procurement processes not followed None 973 085 Total 980 965

25.3 Details of irregular expenditure not recoverable (not condoned)

Incident Not condoned by (condoning 2014/15 authority) R’000

Sufficient number of quotations not obtained (R2 000 – National Treasury 25 R10 000) Sufficient number of quotations not obtained (R10 000 – National Treasury 1 583 R30 000) Sufficient number of quotations not always obtained and National Treasury 5 514 PPPFA requirements not always fully met (R30 000 – R500 000) Adequate tender procedures not followed (Above National Treasury 21 454

170

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

R500 000) Housing grant procurement processes not followed National Treasury 1 609 364 Total 1 637 940

25.4 Details of irregular expenditures under investigation

Incident 2014/15 R’000

Sufficient number of quotations not obtained (R10 000 – R30 000) 5 566 Sufficient number of quotation not obtained and PPFA requirement not always fully met 6 975 (R30 000 – R500 000) Adequate tender procedures not followed (Above R500 000) 31 444 Employee acted n higher vacant posts for an uninterrupted period 102 Contracts taken over 12 874 Appointment of employees on contract basis 3 846 Overtime worked 4 Housing grant procurement processes not followed 2 878 659 Total 2 939 470

25.5 Prior period error

Note 2013/14 R’000 Nature of prior period error 31 Relating to 2013/14 Irregular expenditure 1 218 Total 1 218

Irregular expenditure increased with R1 218 040 based on the conclusion reached on the items included in the current year audit and which have a prior year impact.

25.6 Details of the non-compliance where an institution was not represented in a bid committee for contracts arranged by other institutions

Incident 2014/15 R’000

Blackhead Consulting T/A Diamond Hill 76 000 Total 76 000

During the year the Department entered into a contract with Blackhead Consulting T/A Diamond Hill for the audit and assessment of asbestos eradication.

The service provider was used by Gauteng Province and the Department obtained permission to use the service provider in terms of TR16A6.6.

171

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Due to the fact that the appointment of Blackhead Consulting was not seen as fair, equitable and transparent by the auditors of Human Settlements: Gauteng, the appointment is deemed to be irregular for Department Human Settlements: Free State Province

26. Fruitless and wasteful expenditure

26.1 Reconciliation of fruitless and wasteful expenditure 2014/15 2013/14 R’000 R’000

Opening balance 2 226 1 968 Fruitless and wasteful expenditure – relating to current year 190 258 Fruitless and wasteful expenditure awaiting resolution 2 416 2 226

26.2 Analysis of awaiting resolution per economic classification 2014/15 2013/14 R’000 R’000

Current 680 490 Transfers and subsidies 1 736 1 736 Total 2 416 2 226

26.3 Analysis of Current year’s fruitless and wasteful expenditure Incident Disciplinary steps 2014/15 taken/criminal proceedings R’000

Interest on overdue accounts None 188 Payment to SARS None 2 Total 190

27. Related party transactions 2014/15 2013/14 R’000 R’000 Loans to /from related parties Non-interest bearing loans to/(from) 12 168 11 456 Total 12 168 11 456

172

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

The Housing Fund falls under the administration of the Department of Human Settlements and shares the same Accounting Officer. Once the fund ceases to operate, the bank balance will be surrendered to the Department.

The Department of Cooperative Governance and Traditional Affairs rendered a shared service on the following directorates within Programme 1 to the Department of Human Settlements: Ant-corruption and Security, Information Technology and Communication services there were also communication expenditure that was paid by the Department of Human Settlements on behalf of the Department of Cooperative Governance and Traditional Affairs and vice versa. The service provider is in process to assess the amount for each Department. The Department of Cooperative Governance and Traditional Affairs also paid certain invoices on behalf of the Department of Human Settlements with regard to SITA services and the MEC‟s outreach programme that is recorded/ in the inter Departmental payables. Due to the complexity of the shared service between the Departments, it is impracticable to include an exact amount of the shared service and therefore no value for this service can be attributed to these transactions. The Departments have also come to an understanding that no value for these services will be exchanged.

28. Key management personnel No. of 2014/15 2013/14 Individuals R’000 R’000

Level 15 to 16 2 (2) 3 250 2 978 Level 14 (incl. CFO if at a lower level) 5 (6) 5 321 5 507 Family members of key management personnel 1 (1) 253 235 Total 8 824 8 720

29. Non-adjusting events after reporting date 2014/15 R’000 During the current financial year the department was involved in a court case, which was 1 420 still ongoing at year-end. Subsequent to year-end, the court case was finalised and an outcome was provided to the department. The outcome of the court case resulted in the immediate dismissal of certain senior managers involved in the case. The leave for these employees will still be paid out by the department. The leave amount to be paid will be R1 420 137.83. Total 1 420

30. Movable Tangible Capital Assets MOVEMENT IN MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2015 Opening Additions Disposals Closing balance Balance R’000 R’000 R’000 R’000

MACHINERY AND 7 523 2 044 - 9 567 EQUIPMENT Computer equipment 3 702 861 - 4 563 Furniture and office equipment 3 561 682 - 4 243

173

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Other machinery and equipment 260 501 - 761 - TOTAL MOVABLE TANGIBLE CAPITAL ASSETS 7 523 2 044 - 9 567

Movable Tangible Capital Assets under investigation Number Value R’000

Included in the above total of the movable tangible capital assets per the asset register are assets that are under investigation: Computer equipment 92 1 163 Furniture and office equipment 33 366 Other machinery and equipment 4 37 Total 129 1 566

Included in the asset register are 129 major assets which are under investigation by the Department. The assets identified as under investigation relate to assets not verified in the financial year. As this process was completed at year-end, the Department deemed it necessary to perform additional verifications in the next financial year to identify the location of these assets. Should the assets still not be located, the Department would determine the last users of these assets and enquire as to the location of the assets. Based on this the Department will determine if the assets can be located or if the assets should be written-off or if loss control proceedings will be initiated and recoveries performed.

30.1 Additions

ADDITIONS TO MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2015 Cash Non-cash (Capital Received Total Work in current, not Progress paid current (Paid costs and current finance year, lease received payments) prior year) R’000 R’000 R’000 R’000 R’000

MACHINERY AND 2 752 - (804) 96 2 044 EQUIPMENT Computer equipment 822 - - 39 861 Furniture and office equipment 625 - - 57 682 Other machinery and equipment 1 305 - (804) - 501

TOTAL ADDITIONS TO MOVABLE TANGIBLE CAPITAL ASSETS 2 752 - (804) 96 2 044

174

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

30.1 Movement for 2013/14 MOVEMENT IN MOVABLE TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Opening Prior period Additions Disposals Closing balance error Balance R’000 R’000 R’000 R’000 R’000

MACHINERY AND 4 090 (16) 3 449 - 7 523 EQUIPMENT Computer equipment 2 260 - 1 441 - 3 702 Furniture and office equipment 1 810 1 1 768 - 3 561 Other machinery and equipment 20 (17) 240 - 260

TOTAL MOVABLE TANGIBLE CAPITAL ASSETS 4 090 (16) 3 449 - 7 523

30.1.1 Prior period error Note 2013/14 30.1 R’000 Nature of prior period error Relating to 2013/14 financial year. Error relates to the rounding errors 2 resulting in computer equipment and furniture and office equipment being increased by R1 000 each. Additionally donations were incorrectly not removed from the asset (18) register resulting in a decrease of furniture and office equipment to the amount of R18 000

Total (16)

30.2 Minor assets

MOVEMENT IN MINOR ASSETS PER THE ASSET REGISTER FOR THE YEAR ENDED AS AT 31 MARCH 2015 Specialised Intangible Heritage Machinery Biological Total military assets assets and assets assets equipment R’000 R’000 R’000 R’000 R’000 R’000

Opening - 56 - 3 706 - 3 762 balance Additions - - - 250 - 250 TOTAL MINOR ASSETS - 56 - 3 956 - 4 012

175

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Specialised Intangible Heritage Machinery Biological Total military assets assets and assets assets equipment R’000 R’000 R’000 R’000 R’000 R’000

Number of R1 - - 182 - 182 minor assets Number of - 20 - 2 495 - 2 515 minor assets at

TOTAL MINOR ASSETS - 20 - 2 677 - 2 697

Minor Capital Assets under investigation Number Value R’000

Included in the above total of the minor capital assets per the asset register are assets that are under investigation: Machinery and equipment 387 553

Included in the asset register are 387 minor assets which are under investigation by the Department. The assets identified as under investigation relate to assets not verified in the financial year. As this process was completed at year-end, the Department deemed it necessary to perform additional verifications in the next financial year to identify the location of these assets. Should the assets still not be located, the Department would determine the last users of the assets and enquire as to the location of these assets. Based on this the Department will determine if the assets can be located or if the assets should be written-off or if loss control proceedings will be initiated and recoveries performed.

Minor assets

MOVEMENT IN MINOR ASSETS PER THE ASSET REGISTER FOR THE YEAR ENDED AS AT 31 MARCH 2014 Specialised Intangible Heritage Machinery Biological Total military assets assets and assets assets equipment R’000 R’000 R’000 R’000 R’000 R’000

Opening - 56 - 3 660 - 3 716 balance Prior period - - - (4) - (4) error Additions - - - 50 - 50 TOTAL MINOR ASSETS - 56 - 3 706 - 3 762

176

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Specialised Intangible Heritage Machinery Biological Total military assets assets and assets assets equipment R’000 R’000 R’000 R’000 R’000 R’000

Number of R1 - - - 91 - 91 minor assets Number of - 20 - 2 454 - 2 474 minor assets at cost TOTAL NUMBER OF MINOR ASSETS - 20 - 2 545 - 2 565

30.3.1 Prior period error Note 2013/14 29.2 R’000 Nature of prior period error Relating to 2013/14 The restatement consisted of donations that were (4) erroneously not removed from Minor assets Total (4) 31. Intangible Capital Assets MOVEMENT IN INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2015 Opening Prior period Additions Disposals Closing balance error Balance R’000 R’000 R’000 R’000 R’000

SOFTWARE 629 - - - 629

TOTAL INTANGIBLE CAPITAL ASSETS 629 - - - 629

31.1 Movement for 2013/14

MOVEMENT IN INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2014 Opening Prior period Additions Disposals Closing balance error Balance R’000 R’000 R’000 R’000 R’000

SOFTWARE 629 - - - 629

TOTAL INTANGIBLE CAPITAL ASSETS 629 - - - 629

177

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

32. Prior period errors

32.1 Correction of prior period errors 2013/14 R’000 Expenditure Increase in Unspent Funds transferred to Beneficiaries 1 137 Net effect 1 137

Unspent Funds transferred to Beneficiaries were restated due to new confirmations received of amounts utilised by beneficiaries.

2013/14 R’000 Assets Decrease in Accrued Departmental Revenue (29 885) Decrease in Minor Assets (4) Decrease in Machinery and Equipment (16) Net effect (29 905) Accrued Departmental Revenue was restated due to the fact that payments made to material suppliers were incorrectly included in the balance.

Minor Assets were restated due to donations made that were erroneously not removed in the previous financial year.

Machinery and Equipment were restated due to rounding errors and donations made that were erroneously not removed in the previous financial year.

2013/14 R’000 Liabilities Increase in Commitments: Current Expenditure Approved and Contracted 281 Decrease in Commitments: Capital Expenditure Approved and Contracted (42 836) Decrease in Accruals (18 989) Decrease in Employee Benefits: Other (256) Decrease in Payables: Other Payables (247) Increase in Payables: Clearing Accounts 247 Increase in Finance Lease Commitments 4 Increase in Employee Benefits: Performance awards 2 994 Decrease in Contingent liabilities (7 687) Net effect (66 489)

Commitments were assessed and restated to improve the fair presentation of the financial statements.

Accruals were assessed and restated to improve the fair presentation of the financial statements. Payments made to material suppliers were also incorrectly included in the balance.

178

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Employee Benefits were restated due to Other Employee Benefits (which includes payments such as S&T allowances, acting allowances, overtime etc.) which were incorrectly included in Employee Benefits, the removal of negative leave credits as well as the recognition of Long Service Awards.

Other Payables and Clearing Accounts were restated due to Salary Income Tax and Salary Pension Fund that were incorrectly disclosed under Other Payables instead of Clearing Accounts.

Finance Lease Commitments were restated due to incorrect expiry dates used in the Finance Lease Commitment calculation.

Employee Benefits: Performance awards were restated to include the entire provision of the performance awards.

Contingent liabilities were restated to take into account a payment made before year-end.

33. Agent-principal arrangements

33.1 Department acting as principal

2014/15 2013/14 R’000 R’000 National Housing Fund Corporation (NHFC) - - Total - -

NHFC was appointed by the Department to act as its agent in administering and implementing the Finance Linked Individual Subsidy Programme (FLISP) on its behalf in the Free State.

The Department did not make any payments to NHFC during 2013/14 or 2014/15.

179

DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 NOTES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

34 STATEMENT OF CONDITIONAL GRANTS RECEIVED

GRANT ALLOCATION SPENT 2013/14

Division of Roll DORA Other Total Amount Amount Under / % of Division Amount

Revenue Overs Adjust- Adjust- Available received spent by (Over- available of spent by Act/ ments ments by Department spending) funds Revenue Department NAME OF Provincial Department spent by Act DEPARTMENT Grants Department R’000 R’000 R'000 R'000 R’000 R'000 R'000 R'000 % R’000 R’000 HSDG 1 061 756 - - - 1 061 756 1 061 756 1 061 756 - 100% 1 350 936 1 350 936 EPWP 2 000 - - - 2 000 2 000 2 000 - 100% - - Military Veterans 14 886 - - - 14 886 14 886 - - 0% - - 1 078 642 - - - 1 078 642 1 078 642 1 063 756 14 886 1 350 936 1 350 936

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

ANNEXURE 1 A STATEMENT OF TRANSFERS TO HIGHER EDUCATION INSTITUTIONS

TRANSFER ALLOCATION TRANSFER 2013/14 Adjusted Roll Adjustments Total Actual Amount not % of Appropriation Appropriation Overs Available Transfer transferred Available Act funds NAME OF HIGHER EDUCATION Transferred INSTITUTION R'000 R'000 R'000 R'000 R'000 R'000 % R'000 University of the Witwatersrand / 1 108 - - 1 108 352 756 215% - Free State 1 108 - - 1 108 352 756 - -

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

ANNEXURE 1B STATEMENT OF TRANSFERS TO HOUSEHOLDS TRANSFER ALLOCATION EXPENDITURE 2013/14 Adjusted Roll Adjust Total Actual % of Appro- Appro- Overs -ments Available Transfer Available priation priation funds Act Act Transferred HOUSEHOLDS R'000 R'000 R'000 R'000 R'000 % R'000 Transfers Individual housing subsidies (R0-R3 500) non – credit linked (1 534) - 9 652 8 118 8 118 100% 7 987 Housing finance linked individual subsides (FLIPS)-(R3 501 – 5 480 - (5 480) - - - - R7 000) Enhanced Extended Discount Benefit Scheme (EEDBS) 514 - (514) - - - - Rectification of housing stock (pre 1994) 80 791 - 6 623 87 414 87 414 100% 13 980 Operational Capital Budget 53 088 - (19 518) 33 570 28 570 85% 60 476 Blocked projects 5 858 - 91 573 97 431 97 431 100% 22 315 NHBRC enrolment (related to grant) 15 000 - 21 792 36 792 36 792 100% 6 988 Land parcels procured (IHAHSD) 20 000 - 20 000 20 000 100% 70 000 Integrated Residential Development Programme: Phase 1: Planning and 192 440 - (151 819) 40 621 40 621 100% 403 139 Services Integrated Residential Development Programme: Phase 1: Planning and 6 344 49 391 55 735 55 735 100% - Services INFORMAL SETTLEMENT Integrated Residential Development Programme: Phase 4: Top Structure 528 594 - 36 489 565 083 550 197 97% 400 619 construction (Informal settlement) People‟s Housing process 3 781 - 8 708 12 489 12 489 100% 51 474 Emergency Housing Assistance 9 810 (9001) 8 910 8 910 100% 16 166 Institutional Subsidies 33 591 - (5 458) 28 133 28 133 100% 95 503 Community residential unit (CRU) Converted/Upgraded 107 999 - (25 653) 82 346 82 346 100% 190 769 Social and Economic Facilities ------1 233 Accreditation of Municipalities ------5 000 Social House Cap GRT for Rental Housing - - - - - 235

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

TRANSFER ALLOCATION EXPENDITURE 2013/14 Adjusted Roll Adjust Total Actual % of Appro- Appro- Overs -ments Available Transfer Available priation priation funds Act

Act Transferred HOUSEHOLDS R'000 R'000 R'000 R'000 R'000 % R'000 Rectification of RDP Stock 1994-2002 ------5 052 H/H Donations & Gifts 965 - 965 949 98% 808 H/H Empl S/Ben Leave gratuity 355 - - 335 350 99% 57 EPWP Incentive Grant 2 000 - - 2000 2 000 100% - Total 1 065 076 - 14 886 1 079 962 1 060 054 1 351 801

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

ANNEXURE 1C STATEMENT OF GIFTS, DONATIONS AND SPONSORSHIPS RECEIVED

2014/15 2013/14

NAME OF ORGANISATION NATURE OF GIFT, DONATION OR SPONSORSHIP R’000 R’000

Received in cash Etso Civils GOVERN MBEKI AWARDS 150 10 Ernst & Young GOVERN MBEKI AWARDS 50 - Mafuri Infrastructure Africa GOVERN MBEKI AWARDS 115 - Mafuri Turnkey GOVERN MBEKI AWARDS 150 - Subtotal 465 10

Received in kind NHBRC – Sponsor of a voucher at Lillies Sales & Service - 100 Ernst & Young - 50 Housing Development Agency (HDA) – 3 Mini Ipads - 15 NURCHA – 2 Laptops and 300 Laptop bags - 10 ETSO Civils – Accommodation Freedom Day Celebrations 45 - Mafuri Infrastructure Africa – Transport and Catering Freedom Day Celebrations 35 - Subtotal 80 175

TOTAL 545 185

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

ANNEXURE 1D

STATEMENT OF ACTUAL MONTHLY EXPENDITURE PER GRANT

Grant type April May June July August September October November December January February March 2014 2014 2014 2014 2014 2014 2014 2014 2014 2015 2015 2015 Total R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

Human - 69 679 71 406 50 314 70 675 127 508 153 404 104 063 137 732 57 179 110 060 109 736 1 061 756 Settlement Development Grant Other - - - - - 800 600 - - 600 - - 2 000 Total - 69 679 71 406 50 314 70 675 128 308 154 004 104 063 137 732 57 779 110 060 109 736 1 063 756

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

ANNEXURE 2

STATEMENT OF CONTINGENT LIABILITIES AS AT 31 MARCH 2015

INZUZO TRADING 509 CC/DEPT HS. An application wherein the applicant is requesting 33 575 - - - 33 575 the court to order the Department to pay for losses in income due to termination of construction contracts as at 31 March

Claims received by the Department currently under investigation 32 483 45 593 23 597 - 54 479

CEM BRICK MANUGACTURERS CC/HOD HS & ZIMVO TRADING The plaintiff is suing the Department and the Contractor jointly and severally the one to 1 756 - - - 1 756 pay the other to be absolved. The claim is based on a material cession agreement that was entered into between the Contractor and the Plaintiff. The Plaintiff is alleging that the Department failed to pay the cession agreement in full.

TEBFIN PTY LTD/ZINGANA MBELE CONSTRCUTIO & MEC HUMAN SETTLEMENT Claim for the non-payment of a cession agreement 455 - - - 455

UBUHLEBETHU BUSINESS ENTERPRISES CC AND THE MEC FOR HS Applicant is claiming for the partially completed 38 houses - 316 316 - -

SPRING LIGHTS DEVELOPMENT PTY LTD/MOLEBOHENG TRADING CC AND THE THREE OTHERS Applicant is claiming from the first respondent which is the amount that would have been - 2 969 2 969 - -

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

Opening Liabilities Liabilities Closing Liabilities paid/cancelle recoverable Balance Balance Nature of Liability incurred d/reduced (Provide during the during the details 31 March 1 April 2014 year year hereunder) 2015 R’000 R’000 R’000 R’000 R’000 due to them as the sub-contractor in terms of a contractor for building houses between the Department and the first respondent. They are also praying for an order in terms of which the Department will be ordered to pay any and all amounts due to the first respondent directly to the applicant

DMV BAELETSI PTY LTD/MEC HS The applicant is suing the Department of Project Management and Engineering Services - 336 336 - - provided by the applicant in the Development of Houses in Maqhekung

DEPT HS SELLOANE & 200 OTHERS REAHOLA HOUSING ASSOCIATION & 10 - 55 - - 55 OTHERS STANDARD BANK Om 23 October 2014 the CFO was served with a notice of execution of the Departments property. This resulted from a High Court matter wherein the Department appointed MB Mogotsi Attorneys to act on behalf of Mr Selloane and 200 residents of Reahola. The application was to dissolve the Reahola Housing Board under Reahola Housing Association. The respondent in this matter, reasons for dissolving the Board were mismanagement of funds, failure to issue title deeds, failure to maintain the place etc. The Department was involved in the mater as a way of protecting the Housing Institutional Subsidies that were issued to these residents. In the notice received it is indicated that the respondent received a Court Order against the Department on the 25 August 2014, however the Department was not aware of such matter we were never served and we also checked with the registers file there in no return served.

TEBFIN PTY LTD/KENTHA CONSTRUCTION (PTY) LTD & MEC COGTA & HS - 72 - - 72 Claim of R72 000 for the non-payment of a cession agreement

VISIBLE SPEED T/A APOLO CONSTRUCTION & MEC COGTA/HS Breach of contract by the defendant, by not allowing the plaintiff to complete the projects - 2 399 - - 2 399 they were appointed for 106 units in Hennenman and 100 units in Ventersburg

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

INDIVIDUAL SUBSIDIES - 5 704 - - 5 704 The Department had contingent liability due to letters sent to contractors and attorneys with regard to individual subsidies TOTAL 68 571 57 444 27 520 - 98 495

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DEPARTMENT OF HUMAN SETTLEMENTS VOTE 13 ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

ANNEXURE 3 CLAIMS RECOVERABLE

Confirmed balance Unconfirmed balance Cash in transit at year end outstanding outstanding Total 2014/15 * Receipt date up to six (6) Government Entity working days after year 31/03/2015 31/03/2014 31/03/2015 31/03/2014 31/03/2015 31/03/2014 end Amount R’000 R’000 R’000 R’000 R’000 R’000 R’000 Department National Department of Home - 14 14 - 14 14 - - Affairs Cooperative Governance - - 26 - 26 - - - Sub-Total - 14 40 40 14 - - Other Government Entities - - Mangaung Furnserv - - 265 265 265 265 - - Mangaung Bomme Building - - 230 230 230 230 - - construction SARS - 1 19 - 19 1 - - Matjhabeng Municipality - - 34 - 34 - - - Moqhaka Municipality - - 26 - 26 - - - Sub-Total - 1 574 495 574 496 - -

TOTAL - 15 614 495 614 510 - -

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ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

ANNEXURE 4 INTER-GOVERNMENT PAYABLES

Confirmed balance Unconfirmed balance Cash in transit at year end outstanding outstanding TOTAL 2014/15 * Payment date up to six (6) GOVERNMENT ENTITY working days before year 31/03/2015 31/03/2014 31/03/2015 31/03/2014 31/03/2015 31/03/2014 end Amount R’000 R’000 R’000 R’000 R’000 R’000 R’000 DEPARTMENTS Current Department of the Premier 112 86 - - 112 86 - - Department of Cooperative 1 118 3 - - 1 118 3 - - Governance Department of Justice 91 167 - - 91 167 - - Total 1 321 256 - - 1 321 256 - -

OTHER GOVERNMENT ENTITY Current Fleet Management 562 709 - - 562 709 - - Subtotal 562 709 - - 562 709 - -

Total 1 883 965 - - 1 883 965 - -

AFS for Free State Department of Human Settlements 190 DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

ANNEXURE 5 INVENTORIES

Note Quantity 2014/15 Quantity 2013/14 Inventory R’000 R’000

Opening balance 6 747 7 - - Add/(Less): Adjustments to prior year balance - - - 2 Add: Additions/Purchases - Cash - - 4 714 Add: Additions - Non-cash 1 593 91 527 6 764 24 (Less): Issues - - (4) (714) Add/(Less): Adjustments - - (17) (19) - - - - Closing balance 8 340 91 534 6 747 7

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ANNEXURES TO THE ANNUAL FINANCIAL STATEMENTS for the year ended 31 March 2015

ANNEXURE 6 MOVEMENT IN CAPITAL WORK IN PROGRESS

MOVEMENT IN CAPITAL WORK IN PROGRESS FOR THE YEAR ENDED 31 MARCH 2015 Opening Current Completed Closing balance Year Capital Assets balance WIP R’000 R’000 R’000 R’000

BUILDINGS AND OTHER FIXED 453 182 544 422 (91 527) 906 077 STRUCTURES Dwellings 453 182 544 422 (91 527) 906 077 TOTAL 453 182 544 422 (91 527) 906 077

MOVEMENT IN CAPITAL WORK IN PROGRESS FOR THE YEAR ENDED 31 MARCH 2014 Opening Prior period Current Completed Closing balance error Year Capital Assets balance WIP R’000 R’000 R’000 R’000 R’000

BUILDINGS AND OTHER - - 453 189 (7) 453 182 FIXED STRUCTURES Dwellings - - 453 189 (7) 453 182 TOTAL - - 453 189 (7) 453 182

192

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2015

193

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

CONTENTS PAGE

GENERAL INFORMATION 195

REPORT OF THE ACCOUNTING OFFICER 197

ACCOUNTING OFFICERS RESPONSIBLITIES AND APPROVAL STATEMENT 199

REPORT OF THE AUDITOR-GENERAL 200

STATEMENT OF FINANCIAL POSITION 201

STATEMENT OF FINANCIAL PERFORMANCE 202

STATEMENT OF CHANGES IN NET ASSETS 203

CASH FLOW STATEMENT 204

ACCOUNTING POLICIES 205

NOTES TO THE FINANCIAL STATEMENTS 217

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DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2015

GENERAL INFORMATION

Accounting Officer: Mr N. Mokhesi

Registered office: OR Tambo House Cnr St Andrews and Markgraaf Street Bloemfontein 9301

Business address: OR Tambo House Cnr St Andrews and Markgraaf Street Bloemfontein 9301

Postal address: P.O. Box 211 Bloemfontein 9300

Domicile and legal form: The Fund is domiciled in Bloemfontein within the Free State Province, South Africa. The Fund is an entity falling under the administration of the Free State Department of Human Settlements.

Jurisdiction: The Fund falls within the jurisdiction of the Republic of South Africa.

Banker: Standard Bank of South Africa

Auditor: Auditor-General

Nature of business: The provision of low cost housing in the Free State in terms of the Free State Housing Act of 1999.

Level of assurance: These annual financial statements have been prepared in accordance with Generally Recognised Accounting Practices in order to provide users thereof with relevant and accurate economic information regarding the Fund for the year ended 31 March 2015.

Preparer: The annual financial statements were independently compiled by Ernst & Young Advisory Services (Proprietary) Limited.

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FREE STATE HOUSING FUND for the year ended 31 March 2015

Supervised by: The annual financial statements are under the direction and supervision of Mr. N. Mokhesi, the Head of the Department of Human Settlements.

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FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND

REPORT OF THE ACCOUNTING OFFICER FOR THE YEAR ENDED 31 MARCH 2015

The accounting officer submits his report for the year ended 31 March 2015:

1. Review of activities

Main business and operations

The Fund is established for the provision of low cost housing in the Free State in terms of the Free State Housing Act of 1999.

The operating results and state of affairs of the Fund are fully set out in the attached annual financial statements and do not in my opinion require any further comment.

2. Going concern

It is the intention of the Accounting officer to close the Fund during the next financial year and therefore it is no longer a going concern as management intends to liquidate the Fund or to cease operations. GRAP 1 – Presentation of Financial Statements requires that the financial statements should not be prepared on a going concern basis if management intends to liquidate the Fund or to cease trading. In view of this the carrying value of the assets, which were determined in accordance with the going concern basis, have been reviewed for possible impairment and changes which have occurred since the year end and consideration has been given as to whether any additional provisions are necessary as a result of the decision to cease operations. It is expected that all assets will realise the amounts at which they are included in the statement of financial position and there will be no material additional liabilities.

Accordingly management does not expect an alternative basis of preparation to be materially different from the going concern basis, and therefore the financial statements have been prepared on a going concern basis.

3. Events after the reporting period

The accounting officer is not aware of any matters or circumstances arising since the end of the financial year.

4. Auditor

The Auditor-General South Africa will audit the Fund as prescribed.

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FREE STATE HOUSING FUND for the year ended 31 March 2015

5. Compilation of annual financial statements

The compiler was responsible for the preparation of the annual financial statements based on information provided by management and worked under the supervision of management. Management is responsible for these annual financial statements.

The state of the fund‟s affairs, its performance and cash flow for the year under review is properly disclosed in the enclosed financial statements. The financial statements state the affairs, performance, and cash flow for the individual fund.

______Accounting Officer

N Mokhesi

Date: 31 July 2015

______Acting Chief Financial Officer

N Leuna

Date: 31 July 2015

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FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND

ACCOUNTING OFFICER’S RESPONSIBILITIES AND APPROVAL STATEMENT FOR THE YEAR ENDED 31 MARCH 2015

The accounting officer of the Fund is required in terms of the Public Finance Management Act No, 1 of 1999 (PFMA) 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 their responsibility to ensure that the annual financial statements fairly present the state of affairs of the Fund as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with Generally Recognised Accounting Practices. The external auditors are engaged to express an independent opinion on the annual financial statements.

The annual financial statements are prepared in accordance with Generally Recognised Accounting Practices and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgments and estimates.

The accounting officer acknowledges that he is ultimately responsible for the system of internal financial control established by the Fund and places considerable importance on maintaining a strong control environment. To enable the accounting officer to meet these responsibilities, standards for internal control have been set aimed at reducing the risk of error or loss 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 fund and all employees are required to maintain the highest ethical standards in ensuring the fund‟s operations are conducted in a manner that in all reasonable circumstances is above reproach. While operating risk cannot be fully eliminated, the fund endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The accounting officer is of the opinion, based on the information and explanations given by management that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements. However, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The external auditors are responsible for independently reviewing and reporting on the fund's annual financial statements. The annual financial statements have been examined by the Fund‟s external auditors and their report is presented on page 7.

The annual financial statements set out on pages 8 to 30, which have been prepared on the going concern basis, were approved by the accounting officer on and were signed by:

______Accounting Officer Acting Chief Financial Officer N. Mokhesi N Leuna Date: 31 July 2015 Date: 31 July 2015

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FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND

REPORT OF THE AUDITOR GENERAL FOR THE YEAR ENDED 31 MARCH 2015

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FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND

STATEMENT OF FINANCIAL POSITION AT 31 MARCH 2015

Notes 2014/15 2013/14 R’000 R’000

ASSETS

Current assets 13 780 13 058 Trade and other receivables from 3 81 78 exchange transactions Cash and cash equivalents 4 13 699 12 980

Non-Current assets held for sale 2 571 804

Total assets 14 351 13 862

EQUITY AND LIABILITIES

Capital and reserves

Accumulated surplus 2 184 2 406

Current liabilities

Trade and other payables 5 12 167 11 456

Total equity and liabilities 14 351 13 862

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FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 31 MARCH 2015

Notes 2014/15 2013/14 R’000 R’000

Revenue from exchange transactions 9 549 860

Revenue from non-exchange transactions 9 -

Expenditure: Provision for doubtful debts 547 (222) Other operating expenses - - Finance expense (725) (613) Bad debt written off (591) Operating Surplus / (Deficit) (220) 25

Other income- Administration fees raised on - - property debtors - Capital adjustments on loans - -

Surplus / (Deficit) for the period (220) 25

202

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND STATEMENT OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 MARCH 2015

Accumulated Note Surplus Total R’000

Balance at 01 April 2012 2 374

Restated Surplus / (Deficit) for the period 7

Restated balance at 31 March 2013 2 381

Surplus / (Deficit) for the period 25

Balance at 31 March 2014 2 406

Surplus / (Deficit) for the period (221)

Balance at 31 March 2015 2 185

203

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2015

Note 2014/15 Restated R’000 2013/14 R’000

CASH FLOWS FROM OPERATING ACTIVITIES:

Cash receipts from customers 57 240

Cash paid to suppliers and employees (57) (240) Cash generated from operations 6 - -

Interest received 719 606 Interest paid - -

Net cash flow from operating activities 6 719 606

CASH FLOWS FROM INVESTING ACTIVITIES - -

Net (decrease) / increase in cash and cash equivalents 719 606 Cash and cash equivalents at beginning of period 4 12 980 12 374

Cash and cash equivalents at end of period 4 13 699 12 980

204

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

FREE STATE HOUSING FUND ACCOUNTING POLICIES TO THE FINANCIAL STATEMENTS AT 31 MARCH 2015

1. PRESENTATION OF ANNUAL FINANCIAL STATEMENTS

The principal accounting policies, applied in the preparation of these annual financial statements, are set out below. These accounting policies are consistent with those applied in the preparation of the prior year annual financial statements, unless specified otherwise.

1.1 BASIS OF PREPARATION

These annual financial statements were prepared in accordance with Standards of Generally Recognised Accounting Practice (GRAP), as issued by the Accounting Standards Board in accordance with Section 91(1) of the Public Finance Management Act (Act No 1 of 1999).

The annual financial statements were prepared on the accrual basis of accounting and incorporate the historical cost conventions as the basis of measurement, except where specified otherwise.

In the absence of an issued and effective Standard of GRAP, accounting policies for material transactions, events or conditions were developed in accordance with paragraphs 8, 10 and 11 of GRAP 3 as read with Directive 5.

Assets, liabilities, revenues and expenses were not offset, except where offsetting is either required or permitted by a Standard of GRAP.

1.2 PRESENTATION CURRENCY

These annual financial statements are presented in South African Rand, which is the functional currency of the Fund, and amounts have been rounded to the nearest thousand Rand.

1.3 GOING CONCERN ASSUMPTION

It is the intention of the Accounting Officer to close the Fund during the next financial year and therefore it is no longer a going concern, as management intends to liquidate the Fund or to cease operations. GRAP 1 – Presentation of Financial Statements requires that the financial statements should not be prepared on a going concern basis if management intends to liquidate the Fund or to cease trading. In view of this the carrying value of the assets, which were determined in accordance with the going concern basis, have been reviewed for possible impairment and changes which have occurred since the year end and consideration has been given as to whether any additional provisions are necessary as a result of the decision to cease operations. It is expected that all assets will realise the amounts at which they are included in the statement of financial position and there will be no material additional liabilities.

205

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

1.4 COMPARATIVE INFORMATION

Prior year comparatives

When the presentation or classification of items in the annual financial statements is amended, prior period comparative amounts are also reclassified and restated, unless such comparative reclassification and / or restatement is not required by a Standard of GRAP. The nature and reason for such reclassifications and restatements are also disclosed.

Where material accounting errors, which relate to prior periods, have been identified in the current year, the correction is made retrospectively as far as is practicable and the prior year comparatives are restated accordingly. Where there has been a change in accounting policy in the current year, the adjustment is made retrospectively as far as is practicable and the prior year comparatives are restated accordingly.

The presentation and classification of items in the current year is consistent with prior periods.

1.5 STANDARDS, AMENDMENTS TO STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE

The following standards have been issued, but are not effective for the 2014/15 financial year:

GRAP 18 - Segment Reporting

The standard does not yet have an effective date. The standard requires the identification and aggregation of the operating segments of the Fund into reportable segments. For each of the reportable segments identified details of the financial performance and financial position should be disclosed.

This standard will not have an effect on the financial statements of the Fund as the Fund does not have different segments for which it is appropriate to separately report financial information.

GRAP 20 – Related Parties (revised)

The standard does not yet have an effective date. This standard provides the requirements for the disclosure of related parties and transactions and balances with related parties. It is based on IPSAS 20, however several principles from IAS 24 has been included. Furthermore definitions and terms have been amended to be relevant in a South African context.

The Fund complied with the requirements of this standard during the period under review.

GRAP 32 - Service Concession Arrangements: Grantor

The standard does not yet have an effective date. The standard provides guidance on how the grantor should account for service concession arrangements. The standard addresses how service concession revenue and the related assets and liabilities should be accounted for. Taking into

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DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015 consideration that the Fund is not involved in service concession arrangements it is considered that this standard will not have a significant impact on its financial statements once it becomes effective.

GRAP 105 – Transfer of Function between Entities under Common Control

The standard does not yet have an effective date. This standard provides the accounting treatment for transfers of functions between entities under common control. The standard determines that assets and liabilities transferred to entities under common control will be recognised at their carrying values (determined by the transferring Entity using an accrual accounting basis) in the records of the receiving Entity. The difference between the consideration transferred and the carrying value of the assets / liabilities transferred is recognised in accumulated surplus / deficit.

This standard will only have an effect on the financial statements of the Fund when functions are transferred between entities under common control. The transfer of functions would be accounted for as mentioned above.

GRAP 106 – Transfer of Function between Entities Not Under Common Control

This standard deals with other transfers of functions not under common control and requires the Entity to measure transferred assets and liabilities at fair value. The difference between the consideration transferred and the carrying value of the assets / liabilities transferred is recognised in accumulated surplus / deficit. This standard does not yet have an effective date.

This standard will only have an effect on the financial statements of the Fund when functions are transferred between entities not under common control. The transfer of functions would be accounted for as mentioned above.

GRAP 107 – Mergers

This standard deals with requirements of accounting for a merger between two or more entities. The standard determines that the assets and liabilities acquired through the merger should be measured at their carrying values. Any difference between these carrying values and the consideration transferred for the merger is recognised in accumulated surplus / deficit. This standard does not yet have an effective date.

This standard will only have an effect on the financial statements of the Fund when it enters into a merger. The merger would be accounted for as mentioned above.

GRAP 108 - Statutory Receivables

The standard does not yet have an effective date. This standard prescribes the accounting treatment for receivables arising from legislation rather than from contracts entered into between parties. This standard provides that statutory receivables are initially measured at transaction price and subsequently measured using the cost model. Application of the cost model allows for adjustment to the carrying amount to reflect any interest or other charges that may have accrued on the receivable, impairment losses or amounts de-recognised.

This standard is not anticipated to have a significant impact on the financial statements of the Fund.

207

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

IGRAP 12 – Jointly Controlled Entities – Non-monetary Contributions by Venturers

This interpretation provides guidance on the recognition of gains and losses resulting from contributions of non-monetary assets to jointly controlled entities. This interpretation does not yet have an effective date.

This interpretation will not have an effect on the financial statements of the Fund.

1.6 SIGNIFICANT JUDGMENTS AND ESTIMATES

The use of judgment, estimates and assumptions is inherent to the process of preparing annual financial statements. These judgements, estimates and assumptions affect the amounts presented in the annual financial statements. Uncertainties about these estimates and assumptions could result in outcomes that require a material adjustment to the carrying amount of the relevant asset or liability in future periods.

Judgements

In the process of applying these accounting policies, management has not been required in the current year to make judgements that may have a significant effect on the amounts recognised in the financial statements.

Estimates

Estimates are informed by historical experience, information currently available to management, assumptions, and other factors that are believed to be reasonable under the circumstances. These estimates are reviewed on a regular basis. Changes in estimates that are not due to errors are processed in the period of the review and applied prospectively.

In the process of applying the Fund‟s accounting policies the following estimates, were made:

Provision for bad debts

The measurement of receivables is derived after consideration of the provision for bad debts. Management makes certain assumptions regarding the categorisation of debtors into groups with similar risk profiles so that the effect of any impairment on a group of receivables would not differ materially from the impairment that would have been determined had each debtor been assessed for impairment on an individual basis. The determination of this allowance is predisposed to the utilisation of estimates, assumptions and management judgements. In determining this allowance the estimates are made about the probability of recovery of the debtors based on their past payment history and risk profile.

An allowance for this was created on the following basis

208

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

Amount of debt outstanding for 120 days or more as a percentage of the total debt outstanding Recommended allowance 80-100% 100% 60-80% 80% 40-60% 60% 20-40% 40% 0-20% 20%

The basis used has not changed from the prior year, and reflects the most accurate provision calculation.

Effective interest rate

The Fund uses an appropriate interest rate, taking into account guidance provided in the standards, and applying professional judgement to the specific circumstances, to discount future cash flows. The Fund used the following in arriving at the effective interest rate used:

No Consideration Inputs related to the consideration

1 Market related rate used as starting point National Treasury guidelines

1.7 FINANCIAL INSTRUMENTS

Initial Recognition

The Fund recognises a financial asset or a financial liability in its Statement of Financial Position when, and only when, the Fund becomes a party to the contractual provisions of the instrument. This is achieved through the application of trade date accounting.

Upon initial recognition the Fund classifies financial instruments or their component parts as financial liabilities, financial assets or residual interests in conformity with the substance of the contractual arrangement and to the extent that the instrument satisfies the definitions of a financial liability, a financial asset or a residual interest.

Financial instruments are evaluated, based on their terms, to determine if those instruments contain both liability and residual interest components (i.e. to assess if the instruments are compound financial instruments). To the extent that an instrument is in fact a compound instrument, the components are classified separately as financial liabilities and residual interests as the case may be.

209

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

Initial Measurement

When a financial instrument is recognised, the Fund measures it initially at its fair value plus, in the case of a financial asset or a financial liability not subsequently measured at fair value, transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.

Subsequent Measurement

Subsequent to initial recognition, financial assets and financial liabilities are measured at fair value, amortised cost or cost.

All financial assets and financial liabilities are measured after initial recognition using the following categories:

(a) Financial instruments at fair value (b) Financial instruments at amortised cost, or (c) Financial instruments at cost.

The Fund assesses which instruments should be subsequently measured at fair value, amortised cost or cost, based on the definitions of financial instruments at fair value, financial instruments at amortised cost or financial instruments at cost as set out above.

Concessionary loans

The part of the concessionary loan that is a social benefit or non-exchange revenue is determined as the difference between the fair value of the loan and the loan proceeds, either paid or received.

After initial recognition, the Fund measures concessionary loans in accordance with the subsequent measurement criteria set out for all financial instruments.

De-recognition

A financial asset is derecognised at trade date, when: a) The cash flows from the asset expire, are settled or waived; b) Significant risks and rewards are transferred to another party; or c) Despite having retained significant risks and rewards, the Fund has transferred control of the asset to another entity.

A financial liability is derecognised when the obligation is extinguished. Exchanges of debt instruments between a borrower and a lender are treated as the extinguishment of an existing liability and the recognition of a new financial liability. Where the terms of an existing financial liability are modified, it is also treated as the extinguishment of an existing liability and the recognition of a new liability.

210

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

Gains and losses

A gain or loss arising from a change in the fair value of a financial asset or financial liability measured at fair value is recognised in surplus or deficit.

For financial assets and financial liabilities measured at amortised cost or cost, a gain or loss is recognised in surplus or deficit when the financial asset or financial liability is derecognised or impaired or through the amortisation process.

Offsetting

The Fund does not offset financial assets and financial liabilities in the Statement of Financial Position unless a legal right of set-off exists and the parties intend to settle on a net basis.

Impairments

All financial assets measured at amortised cost, or cost, are subject to an impairment review. The Fund 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 financial assets held at amortised cost

The Fund first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant and individually or collectively for financial assets that are not individually significant. If the Fund determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with similar credit risk characteristics and collectively assesses them for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in the collective assessment of impairment.

If there is objective evidence that an impairment loss on financial assets measured at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset‟s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset‟s original effective interest rate (i.e. the effective interest rate computed at initial recognition). 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 impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor‟s credit rating), the previously recognised impairment loss shall be reversed either directly or by adjusting an allowance account. The reversal shall not result in a carrying amount of the financial asset that exceeds what the amortised cost would have been had the impairment not been recognised at the date the impairment is reversed. The amount of the reversal is recognised in surplus or deficit.

For financial assets held at cost

211

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

If there is objective evidence that an impairment loss has been incurred on an investment in a residual interest that is not measured at fair value because its fair value cannot be measured reliably, the amount of the impairment loss is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed.

Policies relating to specific financial instruments

Cash and cash equivalents

Cash and cash equivalents are measured at fair value.

Cash includes cash on hand and cash with banks. Cash equivalents are short-term highly liquid investments that are held with registered banking institutions with maturities of three months or less and are subject to an insignificant risk of change in value.

For the purposes of the Cash Flow Statement, cash and cash equivalents comprise cash on hand and deposits held on call with banks.

Trade and other receivables

Trade and other receivables are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition and subsequently stated at amortised cost, less provision for impairment. All trade and other receivables are assessed at least annually for possible impairment. Impairments of trade and other receivables are determined in accordance with the accounting policy for impairments. Impairment adjustments are made through the use of an allowance account.

In the current year, and consistent with the prior year, the method of determination of fair value has been determined by actual outstanding debt.

Bad debts are written off in the year in which they are identified as irrecoverable. Amounts receivable within 12 months from the reporting date are classified as current. Interest is charged on overdue accounts.

Trade and other payables

Trade payables are initially measured at fair value plus transaction costs that are directly attributable to the acquisition and are subsequently measured at amortised cost using the effective interest rate method.

1.8 NON-CURRENT ASSETS HELD FOR SALE

Recognition

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is

212

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015 regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification. If the sale is delayed by events or circumstances beyond the Fund‟s control and the Fund remains committed to its plan to sell, this does not preclude the assets as from being classified as held for sale.

Measurement

Non-current assets held for sale (or disposal group) are measured at the lower of carrying amount and fair value less costs to sell.

A non-current asset is not depreciated (or amortised) while it is classified as held for sale or while it is part of a disposal group classified as held for sale.

Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale are recognised in surplus or deficit.

De-recognition

Non-current assets and disposal groups held for sale are derecognised upon disposal of the item or where no further economic benefits or service potential is expected to flow from the asset or disposal group. Gains / losses that result from the de-recognition of non-current assets or disposal groups held for sale are recognised in surplus / deficit in the period of the de-recognition.

1.9 REVENUE RECOGNITION

Revenue from Exchange Transactions

Revenue from exchange transactions refers to revenue that accrues to the Fund directly in return for services rendered or goods sold, the value of which approximates the consideration received or receivable, excluding indirect taxes, rebates and discounts.

Recognition

Revenue from exchange transactions is only recognised once all of the following criteria have been satisfied: a) The Fund retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold; b) The amount of revenue can be measured reliably; and c) It is probable that the economic benefits or service potential associated with the transaction will flow to the Fund and the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue arising out of situations where the Fund acts as an agent on behalf of another entity (the principal) is limited to the amount of any fee or commission payable to the Fund as compensation for executing the agreed services.

213

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

Specific exchange-revenue sources

Rental income arising from Non-Current Assets held for sale is recognised as it legally accrues in terms of the original contract until the date of disposal of the particular property.

Interest on loans is recognised at fair value on a time proportion basis, taking account of the principal outstanding and the effective rate over the period to maturity.

Interest received on the bank account represents an amount that is due to the Provincial Department of Human Settlements on winding-up of the Fund and as such is credited directly to this liability included in Trade Payables.

Measurement

Revenue from exchange transactions is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the Fund.

Expenditure from Exchange Transactions The accounting policy for expenditure arising from exchange transactions is similar to the policy for exchange revenue.

Revenue from Non-Exchange Transactions

Non-exchange transactions are transactions that are not exchange transactions.

Revenue from non-exchange transaction arises when the Fund either receives value from another entity without directly giving approximately equal value in exchange or gives value to another entity without directly receiving approximately equal value in exchange.

Revenue from non-exchange transactions is generally recognised to the extent that the related receipt or receivable qualifies for recognition as an asset and there is no liability to repay the amount.

Grants, transfers and donations received or receivable are recognised when the resources that have been transferred meet the criteria for recognition as an asset and there is not a corresponding liability in respect of related conditions.

Measurement

An asset that is recognised as a result of a non-exchange transaction is recognised at its fair value at the date of the transfer. Consequently, revenue arising from a non-exchange transaction is measured at the fair value of the asset received, less the amount of any liabilities that are also recognised due to conditions that must still be satisfied.

214

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

Where there are conditions attached to a grant, transfer or donation that gave rise to a liability at initial recognition, that liability is transferred to revenue as and when the conditions attached to the grant are met.

Grants without any conditions attached are recognised as revenue in full when the asset is recognised, at an amount equalling the fair value of the asset received.

Interest earned on the investment is treated in accordance with grant conditions. If it is payable to the funder it is recorded as part of the creditor.

Expenditure relating to Non-Exchange Transactions

The accounting policy for expenditure arising from non-exchange transactions is similar to policy for non-exchange revenue.

1.10 SURPLUS OR DEFICIT

Income, expenditure, gains and losses are recognised in surplus or deficit except for the exceptional cases where recognition directly in net assets is specifically allowed or required by a Standard of GRAP.

1.11 EVENTS AFTER THE REPORTING DATE

Events after the 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 Fund will adjust the amounts recognised in the financial statements to reflect adjusting events after the reporting date once the event occurred.

The Fund will disclose 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.

1.12 RELATED PARTIES

The Fund has processes and controls in place to aid in the identification of 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. Related party relationships where control exists are disclosed regardless of whether any transactions took place between the parties during the reporting period.

215

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

Where transactions occurred between the Fund and any one or more related parties, and those transactions were not within:

 normal supplier and/or client/recipient relationships on terms and conditions no more or less favourable than those which it is reasonable to expect the Fund to have adopted if dealing with that individual entity or person in the same circumstances; and  terms and conditions within the normal operating parameters established by the reporting Fund‟s legal mandate;

Further details about those transactions are disclosed in the notes to the financial statements.

1.13 CONSIDERATION OF CONSOLIDATION

The Department of Human Settlements has the ultimate control over the Housing Fund. According to IAS 27 consolidated annual financial statements should be prepared for the Department and Housing Fund, but consolidation is not required due to the fact that the Housing Fund is presented on the GRAP basis of accounting whilst the Department is presented on the modified cash basis of accounting, therefore no consolidated financial statements have to be prepared.

FREE STATE HOUSING FUND NOTES TO THE FINANCIAL STATEMENTS AT 31 MARCH 2015

2014/15 2013/14 R’000 R’000

2. NON-CURRENT ASSETS HELD FOR SALE

Opening balance 804 804 Assets sold (233) - Adjustment for impairment loss - - Closing balance at end of year 571 804

The Assets held for sale consists of land and residential houses. The Free State Housing Fund retains ownership of 80 housing units. In the current year the Debtors system has been updated and 31 properties has been transferred.

These units are occupied by tenants who are required to reimburse the Fund for the usage thereof. It is, however, the intention of the Housing Fund to dispose of the units to the occupants thereof. Whilst this has not occurred up to the year ended 31 March 2015, the circumstances which dictated this were outside of management‟s control, and it remains the intention of management to dispose of the units to the occupants thereof within the next 12 months. Therefore, the units have been disclosed as "Non-current assets held for sale."

216

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

3. TRADE AND OTHER RECEIVABLES FROM EXCHANGE TRANSACTIONS Rental debtors at gross value 1385 1 935 Provision for bad debts for rental debtors (1368) (1 915) Rental debtors at fair value 17 20

Loans to individuals at gross value 35 35 Provision for bad debts for loans to individuals at fair value (35) (35) Loans to individuals at fair value - -

Properties sold at gross value 29 29 Provision for bad debts for properties Sold (29) (29)

Loan account: Department of Human Settlements - - Finance income receivable – Standard Bank 64 58

81 78 Debtors are charged interest as they become past due at a rate of 9% per annum.

Trade and other receivables past due but not impaired: Debtor Neither past 30-60 days 61-90 days 91-120 >120 Total classification due nor days days impaired Rental debtors 2 2 - - - 2 Individual loan ------debtors Properties sold ------debtors Totals 2 2 - - - 2

Trade and other receivables impaired: Debtor classification 1-3 months >3 months Rental debtors 66 1 320 Individual loan debtors 1 35 Properties sold debtors 1 30 Total 68 1 385

Summary of Consumers Industrial / Debtors by Commercial Customer Classification R '000 R '000 as at 31 March 2015 Current (0 – 30 days) 12 64

217

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

31 - 60 Days 12 - 61 - 90 Days 12 - 91 - 120 Days 11 - 121 - 365 Days 1403 - + 365 Days - - Sub-total 1 450 64 Less: Provision for (1433) - doubtful debts Total debtors by customer classification 17 64

as at 31 March 2014 Current (0 – 30 days) 19 58 31 - 60 Days 19 - 61 - 90 Days 19 - 91 - 120 Days 19 - 121 - 365 Days 1 924 - + 365 Days Sub-total 2 000 58 Less: Provision for (1 980) - doubtful debts Total debtors by customer classification 20 58

Reconciliation of the doubtful debt provision 2014/15 2013/2014 R’000 R’000

Balance at beginning 1 982 1760 of the year Contributions to -547 - 222 provision Doubtful debts written - off against provision - Reversal of provision - Increase/ (Decrease) - due to change in - estimate Change due to 1982 correction of errors - Balance at end of year 1 435

218

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

2014/15 2013/14 R’000 R’000

4. CASH AND CASH EQUIVALENTS

Cash on hand and bank balances 13 699 12 980 13 699 12 980

Cash at Standard Bank earned 5% interest per annum.

5. TRADE AND OTHER PAYABLES 2014/15 2013/14 R’000 R’000 - - Sundry payables Funds to be transferred to Department of 12 167 11 456 Human Settlements, made up as follows:

Funds owed to the Department of Human Settlements represented by the cash and 13 764 13 037 cash equivalents of the Fund, less

Funds owed to the Housing Fund by the (1 596) (1 581) Department of Human Settlements

12 167 11 456

Upon closure of the Fund, the amount owed by the Department of Human Settlements will be settled against the payable owed to the Department of Human Settlements, and the net amount will be paid over to the aforementioned Department.

6. RECONCILIATION OF NET PROFIT TO CASH GENERATED FROM OPERATIONS 2014/15 2013/14 R’000 R’000

Surplus/(Deficit) for the year (221) 25

Adjustments for: - Interest received (719) (606) - Provision for bad debts movement (547) 219 - Bad debt write off 591 - - Rebate on sale of assets 232 -

219

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

Operating profit before working capital changes (664) (362) Changes in working capital:

-(Increase) / Decrease in Trade and other receivables (47) (227)

- Increase / (Decrease) in Trade and other payables 711 589 Cash generated from Operations - -

FREE STATE HOUSING FUND NOTES TO THE FINANCIAL STATEMENTS AT 31 MARCH 2015

7. FINANCIAL INSTRUMENTS

Set out below is a comparison by category of carrying amounts and fair values of all of the Fund‟s financial instruments that are carried in the financial statements at other than fair values:

Carrying amount Fair Value Note 2014/15 Restated 2014/15 Restated R’000 2013/14 R’000 2013/14 R’000 R’000 Financial Assets

Trade Receivables 3 81 78 81 78 Cash and cash equivalents 4 13 699 12 980 13 699 12 980

Financial Liabilities

Trade Payables 5 12 167 11 456 12 167 11 456

The financial assets and liabilities by category:

The accounting policies for financial instruments have been applied to the line items below:

2015 Financial assets at Financial assets and Total fair value liabilities at amortised cost Trade receivables - 81 81 Cash and cash 13 699 - 13 699 equivalents Trade payables (12 167) (12 167) 13 699 12 086 1 613

220

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

2014 Financial assets at Financial assets and Total fair value liabilities at amortised cost Trade receivables - 78 78 Cash and cash 12 980 - 12 980 equivalents Trade payables - (11 456) (11 456) 12 980 (11 378) 1 602

Risk Management

7.1 Maximum credit risk exposure

The credit risk of trade receivables is not manageable due to the fact that houses are being allocated to low-income tenants in terms of Government policy to promote social housing. In the light of the above significant provision for bad debts has been raised against trade receivables to achieve a recoverable carrying amount.

Credit risk consists mainly of cash deposits, cash equivalents and trade debtors. The Fund only deposits cash with major banks with high quality credit standing and limits exposure to any one counter-party.

Trade and other receivables are presented in the financial statements at amortised cost.

7.1.1 Collateral held and other credit enhancements

The credit risk exposure, as posed by the financial assets detailed above, is mitigated by collateral held in the form of the housing units owned by the Free State Housing Fund in relation to these instruments. Such units remain the property of the Fund until such time as debts are settled and ownership is officially transferred.

7.1.2 Concentration of credit risk

The concentration of credit risk is mainly within the trade and other receivables, relating to debtors at year end, rather than in the cash and cash equivalents of the Fund.

7.2 Liquidity risk

The Fund‟s risk to liquidity is a result of the funds available to cover future commitments. The Fund manages liquidity risk through an ongoing review of future commitments and credit facilities.

Adequate utilised borrowing facilities are monitored.

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DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

The table below analyses the Fund‟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.

2015 Not later than one month Later than one month and not later than three months Trade and other - - payables 2015 Later than three months Later than one year and not later and not later than one year than five years Trade and other 12 167 - payables 2014 Not later than one month Later than one month and not later than three months Trade and other - - payables 2014 Later than three months Later than one year and not later and not later than one year than five years Trade and other 11 456 - payables

7.2.1 Concentration of liquidity risk

The concentration of liquidity risk is mainly within the trade and other payables, which relates to the liability payable to the Department of Human Settlements.

7.2.2 Collateral held and other credit enhancements

The Fund holds no collateral and / or credit enhancements that aid in the mitigation of the liquidity risk it is exposed to.

7.3 Interest rate risk

As the Fund has significant interest-bearing assets, the Fund‟s income and operating cash flows are not substantially independent of changes in market interest rates.

At year end, financial instruments exposed to interest rate risk were as follows:

- Cash and cash equivalents

7.3.1 Concentration of interest rate risk

The concentration of interest rate risk is mainly within the cash and cash equivalents, as this is where the Fund is most exposed to changes in the interest rate.

222

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

7.3.2 Interest rate risk sensitivity analysis

The susceptibility of the Fund‟s financial performance to changes in interest rates can be illustrated as follows:

2015 2015 impact 2014 impact Interest income

Interest rate increase of 100 basis points 137 130 Interest rate decrease 100 basis points (137) (130)

Interest expense Interest rate increase of 100 basis points - - Interest rate decrease 100 basis points - -

The following methods and assumptions were applied in the determination of the interest rate sensitivity analysis:

The main assumption utilised was that the interest rate would not change by more than a percent either way, due to stability in overall rates in the country in the preceding financial year.

The method applied to determine the interest rate sensitivity analysis has the following limitations that may result in the information not being fully representative of the actual future results:

- Market rate volatility may impact the interest rates more than expected.

No changes were made to the methods and assumptions applied, in the prior year, to the determination of the sensitivity analysis.

7.3.3 Collateral held and other credit enhancements

The Fund holds collateral in the form of housing units which may be disposed of in order to mitigate the interest rate risk it is exposed to. No credit enhancements are held which mitigate such risk.

7.4 Financial assets pledged as security

No financial assets have been pledged as security for liabilities in the current or prior year.

7.5 Defaults and breaches

No defaults or breaches occurred in the current or prior year.

7.6 Credit quality of financial assets carried at amortised cost/fair value

7.6.1 Method of determining credit quality of other current financial assets

223

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

The credit quality of trade and other receivables from exchange transactions are determined and monitored with reference to historical payment trends. Accordingly the credit quality of the customers included in the balance of trade and other receivables from exchange transactions is determined internally through application of the Fund's own credit policy. Based on the evaluation of the historical payment trends, customers included in the balance are categorised into groups as per note 1.6 in the financial statements.

7.6.1.1 Impairment disclosures for other current financial assets carried at amortised cost / fair value

Reconciliation between gross and Gross Balances Provision Net Balance net balances for Doubtful Debts R’000 R’000 R’000

Rental debtors 1385 (1368) 17 Individual loan debtors 35 (35) - Property debtors 30 (30) - Total 1 450 (1 433) 17

8. RELATED PARTIES

The only related party of the Fund is the Free State Department of Human Settlements, since the Fund falls under the administration of the Department, and since the Fund shares the same accounting officer. The following represents the total closing balance of amounts due by / (to) the Department. These amounts are not guaranteed. Once the Fund ceases to operate, the bank balance will be surrendered to the Department to cover the payable amount. All related party transactions are at arm‟s length.

Statement of Financial Position Note 2014/15 2013/14

R’000 R’000

Loan Account included in Accounts Payable 5 (12 167) (11 456)

The above loan is included to represent the amount owed to the Department of Human Settlements upon closure of the Fund. There are no terms or conditions attached to this loan.

In addition, the value of services provided to the Housing Fund by the Department of Human Settlements includes the usage of the BAS system as well as the use of services of the employees of the Department to administer the Fund. The value of these services cannot be reliably estimated.

224

DEPARTMENT OF HUMAN SETTLEMENT VOTE 13

FREE STATE HOUSING FUND for the year ended 31 March 2015

9. REVENUE 2014/15 2013/14 R’000 R’000

From exchange transaction Rent income 57 247 Property sold Rebates (232) - Finance income-Bank 725 613 Finance income- Debtors - - Total 550 860

From non-exchange transactions:

None in the current or previous year.

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ANNUAL REPORT 2014/2015 FINANCIAL YEAR

PR311/2015

ISBN 978-0-621-44021-8

DEPARTMENT OF HUMAN SETTLEMENTS P O BOX 211 BLOEMFONTEIN 9300

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