2.2 Financial performance: 1 April to 30 June 2013 2.2.1 At the end of the first quarter the DCS had spent 22,7% of the R18,7% billion allocated it in the 2013/14 financial year. This is 0,6% less than projected. At the end of the same period in the previous financial year, underspending on this programme stood at 2,33%. 2.2.2 At the end of June 2013, the DCS had spent 1,1% less than what was anticipated on the Administration programme. The under- expenditure affected sub-programmes Corporate Services, Internal Audit, Office Accommodation and Management, while higher than anticipated spending occurred in relation to sub-programmes Finance, Residential Accommodation and Ministry. 2.2.3 The Incarceration programme was ahead on planned spending, and had spent 1,1% more than the projected 23,1%. Higher than planned expenditure had occurred on all items, with the most notable variance observed in relation to item: Transfers and Subsidies. Significantly higher than planned expenditure occurred on item: Households. 2.2.4 A 7,7% lower than planned expenditure was reported in relation to the Rehabilitation programme. This is almost R30 million lower than at the end of June 2012. All sub-programmes reflected significantly lower than planned expenditure, the most notable variance being in relation to sub-porgramme Correctional Programmes. 2.2.5 A 3% lower than planned expenditure was reported in relation to Programme Care. Although all sub-programmes were affected by the under-expenditure, the most significant variance occurred in relation to sub-programme Hygiene Services. 2.2.6 A 3,3% lower than planned expenditure was reported in relation to programme Social Reintegration. Although significantly higher than planned expenditure occurred in relation to sub-programme: Community Reintegration, sub- programmes Supervision, Parole Administration and Office Accommodation: Community Corrections reflected lower than expected expenditure. 2.2.7 It is noted with concern that at the end of the first quarter of the 2013/14 financial year, the most prominent under- spending was in relation to the Rehabilitation, Care and Social Reintegration programmes. In August 2013 the DCS ascribed the under-expenditure to, amongst others, delays in the filling of vacancies, late and/or incorrect billing by some of its service providers, challenges as far as reconciling inventories, and systemic challenges related to the BAS, PERSAL and LOGIS transversal systems. 2.2.8 All programmes reflected a much higher than planned expenditure on items Transfers and Subsidies, and Households, in response to which National Treasury recommended that sufficient funds should be budgeted towards the payment of leave gratuities to employees who terminate their service during the remainder of 2013/14. It was also felt that the conservative approach followed by only budgeting modestly for transfers to the household services item was not favourable and required urgent attention if spending was to stabilise. 2.2.9 Deviations from the DCS' original spending plan were evident in April, May and June 2013. Deviations of up to only 8% were allowed, and therefore the -16,9% and 15,3% deviations recorded in April and May were of concern. The DCS' PMG balances at the end of June 2013 represented only 2,4% of what had actually been drawn from the National Revenue Fund. 2.2.10 At the end of June 2013 the DCS had a 4,3% vacancy rate, affecting salary levels 3-5, 6-8 and 9-12 in the main. Natural attrition and the length of time it took to finalise recruitment processes contributed to the increased vacancy rate. 2.2.11 National Treasury welcomed reduced spending on advertising; agency support services; catering and entertainment; travel subsistence; and venues and facilities, but thought increased expenditure on computer services, consultants and contractors over the same period ''rather excessive'' and advised that "explicit cost-containment initiatives" to curb such expenditure should be implemented.