Parliament Annual Report 2021/22

Meeting report

AGSA briefing on Parliament's 2021/22 annual report

Ms Sharonne Adams, Business Executive, Auditor-General of South Africa (AGSA), said that Parliament remained unqualified on its financial statements, with no findings on the report on predetermined objectives and compliance with laws and regulations. It achieved 100 % for every indicator set in the 2021/22 financial period. Programme 1, which had two indicators, and Programme 2, which had ten indicators, were the two programmes audited.

Total revenue of Parliament amounts to R2.815 millon. Total expenditure amounted to R2.813 million of which R52 000 was fruitless and wasteful.

It had incurred annual irregular expenditure of R2.1 million for the 2021/22 financial year, which was related to transfers made to political parties represented in Parliament in excess of what was provided for in the policy on transfers to political parties.

There were two main concerns regarding the audit of the financial statements. The first was that the management did not value the provision for long service awards and the Members' loss of the office gratuity, in line with the Generally Recognised Accounting Practice (GRAP) regarding employee benefits. The second was that the management could not confirm the quantification of the assets destroyed in the fire at the National Assembly for audit purposes.

Key recommendations

The AGSA recommended that Parliament strengthen its controls surrounding preparing the financial statement. A misstatement regarding provisions for long service awards and the Members' loss of office gratuity had been identified and corrected. Furthermore, AGSA requested that the value of assets destroyed in the fire at the National Assembly must be confirmed as soon as access to the building was allowed. Finally, it asked the executive authority to provide assurance by monitoring the implementation of the audit action plan quarterly.

Discussion

Co-Chairperson Mabe asked the AGSA which key role players they had identified. How did their work as AGSA find expression among the citizens? Did they get any feedback from citizens? What did they do with this feedback? What was their relationship with Chapter 9 institutions?

Mr N Singh (IFP) asked if the AGSA was satisfied with the functions of the internal audit unit in Parliament. He highlighted that the Committee also had to check what Parliament says when they report regarding the 100 % achieved targets under the two audited programmes dealing with administration and legislation. He asked for further details on the overpayment of political parties. Had AGSA made the same general comments on the annual performance plans (APPs) to other departments, or were they confined to only this particular audit?

Co-Chairperson Mabe asked how the AGSA dealt with the overpayment of political parties. She was also concerned about the committees that did not follow up on their previous meeting minutes, commenting that “once a matter has been opened, there should be a closure.” She asked the Office of Parliament to provide this joint committee with the list of the committees that had failed to comply and follow up with the previous meetings' minutes.

Ms O Maotwe (EFF) said slide 7 of the presentation had listed the main areas of concern on the audit of the financial statements, and asked how old this information was. Were they saying that even at this point, they did not have the quantification of the assets destroyed by the fire? Where did the irregular expenditure of R2.1 m in slide 8 come from, and what would Parliament do to rectify this issue? Where did the material irregularities identified in slide 17 come from? What has Parliament done so far to address this issue?

AGSA's response

Ms Adams said that the AGSA had a relationship with the citizens through civil society organisations. It was part of their process when they conducted risk assessments, and they received feedback from them. They raise specific matters against all governmental structures. They then take the information and report back to them on the developments that have taken place.

She confirmed that there was a relationship between the AGSA and the Chapter 9 institutions. It had a Memorandum of Understanding (MOU) in terms of the roles, responsibilities and information processes. More information could be provided to the Committee in writing.

She said that one finding from the audit of financial statements was related to the provision of long service awards, which involved a calculation of a technical nature, and was not considered as material non-compliance. Ultimately, the financial statements were fairly represented. She added that further work was done after 30 June, when the audit was completed on quantifying the assets destroyed in the fire. She was sure that Parliament would be in the best place to respond to that issue and indicate what had happened after the audit process.

The AGSA communicated to the affected departments, based on the value added work, specifically the Department of Monitoring and Evaluation. The AGSA could provide further information on the specific committees and their challenges in writing.

Ms Adams said Parliament would provide further information regarding the irregular expenditure incurred. Parliament had had no material irregularities issued for its legislature during the period. Material irregularities had been flighted from an oversight perspective. She pointed out that most Members sat on other committees, so they thought it was important to describe this mechanism and its processes so that governmental structures could be held accountable.

Ms Nosiviwe Mapisa-Nqakula, Speaker of the National Assembly (NA), noted the issues raised by the AGSA. She was particularly interested in quantifying assets destroyed by the fire at the National Assembly. In her understanding, the R2.1 million in irregular expenditure was not necessarily that of the National Assembly of Parliament, which would be discussed further in the next presentation. If need be, they would engage with the Office of the AG to seek clarity on some of the matters raised. 

The Co-Chairperson said she had reservations about how the AGSA office conducted its work, but this would be discussed another day. The AGSA members were thanked and released.

Parliament's Annual Performance Report 2021/22

NA Speaker's comments

Speaker Mapisa-Nqakula said she had expected the first session to give details on any problematic areas in government regarding its finances, and commented that she thought the Committee invited the AGSA before they were ready to present a full report. Perhaps a full report would be given behind the scenes, but she was unsure. The invitation to present was important to the legislature, given government’s role in holding the rest of the state accountable. Therefore, there was a need for exemplary accounting as a national legislature.

The performance of the institution for the 2021/22 financial year was against a unique background necessitated by the unprecedented impact of the COVID-19 pandemic and the fire disaster that left the physical structure of the institution completely destroyed and compromised. Although this destruction had an impact on the ability of Parliament to function effectively, the report they would present today would also demonstrate that the institution had been able to adapt its operations, showed great institutional resilience, and ensured that both the mandate and annual performance and targets of the institutions were fulfilled and achieved. The report highlights a number of lessons for the ability of the institution to function effectively in the context of being tested and the weaknesses amidst risks that the institution was exposed to, from both the fire disaster and COVID-19. It was hoped that these lessons, difficult as they were, had created baselines from which the organisation now had to plan for its future performance, including its capacity to reposition itself for the long-term implications of the disruptions.

Speaker Mapisa-Nqakula said that as the executive authority, they were grateful to Mr Xolile George, Secretary to Parliament, for having landed in his new role on both feet, understanding very quickly the unique challenges since his arrival. He quickly stabilised the institution under very challenging circumstances.

Performance Report Presentation

Mr George was joined by Mr Ravi Moodley, Executive Head: Strategic Management and Governance, of Performance, and Ms Ruby November, Acting Chief Financial Officer (CFO), in presenting the report to the Committee. 

The 2021/22 financial year was impacted by the 3rd and 4th waves of the Covid-19 pandemic.
The fire incident in January 2022 damaged the National Assembly building, the adjacent Old Assembly building and linked buildings, disrupting the proceedings and operations of Parliament.
Parliament responded swiftly by adopting technology and implementing a virtual and hybrid operating model.

Parliament reported on performance and highlights for the year under review, including bills passed, questions asked to the Executive, meetings and sittings.

The Auditor-General Report confirmed no material financial or performance information findings.
Parliament continued to achieve a clean audit for the 2021/22 financial year, despite challenges experienced due to COVID, the fire disaster and declining fiscal budgetary allocations.
Institutional performance improved consistently over the last seven years. The eight consecutive clean audits affirm a clean governance record and strong internal control environment.

Parliament achieved all its performance indicators for the 2021/22 financial year
 
Going forward Parliament still needs to:
Deal urgently with the facility issues presented by the fire,
Focus on creating a sustainable budget
Modernise its IT infrastructure
Continue to upskill both Members of Parliament and Parliamentary Administration to improve oversight.
Engage in business process re-engineering to optimise the operations of Parliament


See attached document for details.

Discussion

Co-Chairperson Mabe said she had been contradicted by the statement in Parliament’s presentation that “the parties’ overpayment, as reflected by the AGSA, might be due to the political parties that failed to account for the money given to them.” Could this be clarified, because the statements from AGSA and Parliament were different? 

Ms S Gwarube (DA) applauded Parliament for its clean audit due to the good financial management. However, they had to ask themselves whether the targets were addressing the impact and substantive role of Parliament. What plans were in place to move away from the quantitative targets to a qualitative assessment, to ensure that the money spent on the parliamentary function was actually doing what it was meant to do? She said it would be impossible to rebuild Parliament and find alternative venues to meet by reducing the budget for the next four years. Were conversations taking place regarding Parliament's budget? How did its financial office relate to the work of the institution? How did Parliament work with the Auditor-General? Did they fulfil the internal audit function?

Ms Maotwe noted the triple challenges of fire, COVID-19 and a declining budget that Parliament had presented. What were the mitigative measures? How were they going to overcome these challenges? There was a need to adapt. What was on the pipeline regarding parliamentary performance? How many Bills had been sent to Parliament in the past financial year? If 20 had been passed, where were the rest? What was the progress on the bills that had not been passed?

She said that Members always wrote letters to the Speaker of Parliament when the Executive did not respond to questions. The situation had recently become worse. There was a lot of arrogance when they asked questions. How many of the 4 342 questions had been responded to timeously, late or not responded to?

She said the presentation's financial slides did not correlate with the presentation given to the Committee Members, which was problematic. Where did the irregular expenditure come from? How was Parliament addressing this and how were they making sure that they do not find themselves in a similar situation again?

Parliament was presenting very ambitious recommendations. How were they going to achieve the recommendations for addressing the fire incident and the budget constraints? What was their plan? When would they solve them? Who would implement these recommendations?

Parliament's responses

Mr George said that mitigating measures were in place to help Parliament deal with the identified risks as part of the annual audit remedial plan action tabled to the audit committee, which would be reviewed on a quarterly basis.

The Sixth Parliament's work for this term was reporting on the fourth leg of a five-year term. Its reports were focused primarily on the transactional elements of reporting on strategy. The annual performance plans (APPs) were characterised as functions of executions. The APPs predominantly focused on the quantitative aspects of Parliament's work, including the number of meetings and committees held. The minutes recorded contributed to an ingredient of the work that needed to be done. They needed to look at how their organisational strategy responded to the transformative agents of Parliament. Part of the five-year priority was the need to improve oversight and extract accountability from the Executive. The accountability could be measured only through a qualitative shift to the outcomes and impacts. He said that the next APP would speak to qualitative measures.

He summarised the fundamental orientations Parliament would implement on the review of its strategy, organisation, contracting and various components of the core business of Parliament.

Speaker Mapisa-Nqakula said that Parliament had had interactions with the Minister of Finance, Mr Enoch Godongwana, together with the management of Parliament, the Chairperson of the National Council of Provinces and National Treasury. A commitment had been made by the Minister of Finance to assist Parliament. He was sympathetic and alive to the fact that there had been an erosion of the parliamentary budget baseline. He had indicated that they should look into the possibility of resolving this issue over a period of time, as it was not a matter that could be dealt with as a once-off.

The effect of the fire in Parliament was discussed thoroughly on how it had negatively impacted the government now and in the future. They believed that National Treasury must aid in restoring Parliament, and had agreed that the restoration must be a separate project. It was proposed that there should be a trilateral project steering committee involving Parliament, the Department of Public Works and Infrastructure (DPWI) and National Treasury. National Treasury could monitor the spending of finances allocated for the project. The transfer payment should be given to Parliament so it could account for the spending on the refurbishment of its institutions’ infrastructure. They had agreed a procurement system that would allow for on-time money spending and ensure proper checks and balances.

Speaker Mapisa-Nqakula said they had also discussed that the transfer of money to political parties be done from Parliament. The Minister of Finance had suggested engaging the Independent Electoral Commision (IEC) on transferring payments to the political parties. The IEC would assume the responsibility as an entity that dealt with the political parties regarding elections and so on. They were still engaging on the matter.

She said that the cost of restoring Parliament might amount to R2.2 billion, including furnishings and information technology (IT) systems. The restoration of the old assembly building might cost about R300 million, and about R1.9 billion would be needed for the restoration of the New Assembly building. They initially had an idea in Parliament of putting up a temporary structure in a modular form within the parliamentary precinct to utilise for the next couple of years. The cost of the modular structure would be the same as the restoration of the Old Assembly building. Together with National Treasury, they had decided that they might as well look into the possibility of restoring Parliament, rather than moving it to Pretoria. That was not the item on the agenda right now -- it did not matter where one moved Parliament to. They still had an obligation in terms of the South African Heritage Resources Agency (SAHRA) to renovate Parliament and restore the current building. The issue of restoring Parliament had become a very urgent matter right now, and this was the route they were opting to take. Even though Parliament was not certain of what would be allocated next week through the medium term budget policy statement (MTBPS) process, there was some commitment from the Minister of Finance that there would be some allocation given to Parliament. There would be expectations that the allocation would be spent between now and the end of the financial year. It would be ring-fenced squarely for the restoration of Parliament.

Mr George added that submissions regarding unforeseen and urgent expenditure due to the fire incident had been made to National Treasury in terms of unavoidable expenditure. Although they would not receive the amount they had requested, they had nevertheless received an indication that the Office would allocate an amount of R118 million to help with the issues raised in July and September around the preparation for the MTBPS, the State of the Nation Address (SONA) and related budget speech debates, and the presentation for next year. Such an amount would help a long way to deal with the restorative aspect of the work, including the enhancement of the digital infrastructure until March.

Follow-up discussion

Mr B Radebe (ANC) appreciated the APP report and said it demonstrated that Parliament continued to be a responsive custodian of the resources of the people of South Africa, considering the minimum under-expenditure and reasonable over-expenditure on certain items. He appreciated the Speaker for providing clarity on the fire incident at Parliament and the way forward. He was very happy that the modular structure issue had been set aside, because it would have taken the same time as the plan to restore Parliament. There was a commitment by Parliament to adhere to the laws of the country by restoring the heritage buildings to their glory and preserving the history of the people of South Africa. During their last meeting, the joint committee had made it clear that they expected Parliament’s administration to submit an implementation plan regarding the trilateral agreement. He had not heard anything mentioned about roping in the office of the AG to offer financial guidance where necessary. There had been an agreement that the money would rest in a parliamentary account. They could not afford a situation where good reports of Parliament could be compromised because of poor management of this mega project. He did not think Parliament had ever managed such a big project worth R2.2 billion, so could it give a commitment to include AGSA as part of the trilateral agreement?

Ms Maotwe said that the Secretary of Parliament must not come and abuse Members of the joint committee by raising matters that were not on the agenda. What was going to happen to the discussion around the move of Parliament to Pretoria? Had a decision been made that it was definitely going to happen? Where was the decision to restore Parliament taken?

Speaker Mapisa-Nqakula said that she had clarified the matter. When they considered building a modular structure, it had to do with providing a temporary shelter for the parliamentary process, rather than being at the Good Hope Chamber. Parliament continued to engage with different stakeholders and entities to get the best advice on the way forward. They discovered that the money they would have spent on building a modular structure was more or less the same amount that would be spent on restoring the Old Assembly building. No decision had been taken other than having an obligation to restore Parliament, even if Parliament was moved to another city. The money they received from National Treasury would be spent on rebuilding Parliament while the other debates were ongoing. They had to prioritise matters.

Co-Chairperson Mabe said that the meeting was a work in progress, and things could not be achieved in one day. She thanked Parliament for its comprehensive report and for being open to engagement. She asked the Members to submit in writing any question that had not been adequately answered.

Committee matters

The Committee's minutes of 23 September were adopted.

The Committee report on Parliament’s 2022/23 first quarter was adopted.

The meeting was adjourned.