annrep 1011 1 to 148.qxp - Department of Defence

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D E P A R T M E N T O F D E F E N C ES U B P R O G R A M M E : F I N A N C I A LS E R V I C E SO v e r v i e wDuring the reporting period, the Financial ManagementDivision played a pivotal role in ensuring that the DOD continuedto uphold the principles of best practice of financialmanagement. The Division ensures an environment in whichthe prescribed deliverables in the utilisation of resources arein line with the principles in the Public Finance ManagementAct (PFMA) of efficiency, effectiveness and economy. Theprescribed products include, inter alia, the Estimates ofNational Revenue and Expenditure, the Annual and InterimFinancial Statements and the internal Financial Managementinformation and other related reports used for decision-makingin the DOD such as the monthly Early Warning Reportson expenditure and cash flow as well as those that are submittedto the National Treasury.In support of the Minister of Defence's commitment to cleaningup the audit report, the Division coordinated the achievementof an improvement in the audit outcomes during theyear under review, within the auspices of the Operation CleanAudit project whose central aim is to produce positive annualaudit outcomes for the DOD. Sustainable mitigation plansof action have been put in place to ensure that the negativeaudit outcomes of the past years do not recur and that the onlyoutstanding asset management audit qualification is alsoeliminated.During the year under review, the Division has worked hardat refining departmental financial processes, systems andpolicies with a view to aligning them with the public financemanagement regulatory framework in order to improve servicedelivery. It is planned that in the coming year, anAccounting Manual will be completed to serve as a tool toempower the DOD regarding defence accounting standards.Furthermore, the Division collaborated with other key roleplayersin the analysis of key issues during preparation forDOD appearance before the Parliamentary Committees suchas the Portfolio Committee on Defence (PCD) and theStanding Committee on Public Accounts (SCOPA) on budgetaryand financial aspects of the strategic plan and theAnnual Report. The SCOPA preparation was used to sensitisethe DOD to key risk areas that contribute to the negative outcomesin the financial statements of the DOD, such as irregularexpenditure, fruitless and wasteful expenditure and unauthorisedexpenditure.The Financial Accounting function paid suppliers of goodsand services and remunerated personnel within the determinedtime frames. Financial transactions were recorded andreported as required. Initiatives are in progress to improvepayments and reduce cash in circulation through the introductionof electronic methods of payment, for which a purchasecard is currently under investigation.In the area of budget Management, the Division providedadvice and support in giving effect to both government prioritiesand DOD initiatives within appropriate adjustments duringthe year under review. These initiatives included interalia, general modernisation, MSDS, improved infrastructure,training of Reserves, compensation of employees and peacesupport operations within a limited budget. The Division alsofocussed on improving revenue management by enhancingexisting policies, providing comprehensive monthly datafrom the logistic and personnel feeder systems, despite theiroutdated status. Budget Management also participated in thedevelopment of the IFMS, while at the same time it enhancedthe existing Financial Management system to ensure compliancewith the new economic reporting framework.Despite high staff turnover, the division continued the excellentservice in respect of its mandate. It recruited competentand skilled people to join the Division by employing the HRDivision to speed up the staffing process.O b j e c t i v e s a n d M e a s u r e sTo provide a cost-effective financial management service tothe Minister of Defence, the Secretary for Defence and theChief of the South African National Defence Force within theevolving regulatory framework, by means of a professionalrepresentative civilian financial management corps and anappropriate financial management system.O u t p u t D e t a i lTable 4.5 below provides detail of the Financial ServicesSubprogramme output, performance measures and targetsspecified in the DOD Strategic Plan FY2010/11.Table 4.5: Financial Services Output Detail for the FY2010/11OutputProvide aneffective andefficientFinancialManagementservicePerformanceIndicatorBudget Preparations:Percentage deviationfrom National Treasurybudget guidelinesBudget Control:Percentage of underexpenditureAnnual TargetComplete and accurateDefence estimateof Revenue andExpenditureFully expendedbudgetActual TargetAchievementThe budget proposals weresubmitted on due dates compliantwith the NT Guidelines.All monthly presentations toPDSC were made. No adversefindings on budget weremade.Reasons for Over/Under AchievementAchievedAchieved32ANNUAL REPORT FY 2010/2011
D E P A R T M E N T O F D E F E N C ETable 4.5: Financial Services Output Detail for the FY2010/11 (continued)OutputEffective andefficient provisionofdepartmentalsupportthrough thetimeous settlementoffinancial obligationsby theDepartment.PerformanceIndicatorFinancial Accounting:Number of adverseaudit findingsFinancial Services(Governance RiskCompliance): Numberof incidences of noncompliance with theframeworkTimeous paymentsclaims against theDepartmentTimeous payments forexternal auditing forservices rendered to thedepartmentTimeous payments oftransaction cost, includingbank chargesAnnual TargetComplete and accuratefinancial statementsCompliance with regulatoryframeworkand appropriate KingreportWithin 30 days ofreceipt of a courtorderWithin 30 days ofreceipt of substantiatinginvoiceWithin 30 days of substantiating documentationActual TargetAchievement1 Audit qualification for2009/10 as issued by AG inAugust 2010Regulatory framework largelycomplied with.100% payment85% payment100% paid within 30 daysperiodReasons for Over/Under AchievementAchievedAchievedAchievedAchievedAchievedEffect of Subprogramme Output Achievement on ENE Vote 21 Purpose, Objectives and Measures.The Subprogramme Financial Services succeeded in providing financial management service to the DOD within the evolvingregulatory framework by means of professional, representative civilian financial management corps supported by anappropriate financial management system.S U B P R O G R A M M E : H U M A NR E S O U R C E S U P P O R T S E R V I C E SO v e r v i e wIn the year under review, the Division remained committed tofocus on establishing programmes to ensure the provision ofhuman resource support in the DOD. This has been achievedby means of the development of the DOD Corporate HRSupport Plan, the provisioning of HR strategic inputs for theDOD Strategic Direction Process, continuous monitoring ofthe implementation of the DOD HR Strategy, provision ofadvice on equal opportunity issues, monitoring of the implementationof equity legislation and monitoring the executionof HR Support Plans and budgets through the monthly HRPlanning Committee.During August 2010, the Division was convened and hostedthe annual DOD Gender Conference with the theme"Together Entrenching Constitutional Imperatives within theDOD". The primary purpose was to report on the progressmade in implementing the Gender Mainstreaming ActionPlan and also to reflect on the Research Findings on the statusof women in the DOD, sixteen years into Democracy.During the period under review, the revised Non-statutoryForces (NSF) Pension Dispensation was approved byCabinet. This makes provision for 100% recognition of theservice period of former NSF members without a requirementto contribute 5%. This, revised dispensation, alsobrought about equity amongst members with more or lessthan 10 years' service to the extent that the 50% recognitionfor members with less than 10 years' service in the previousdispensation was cancelled. The Government EmployeesPension Fund (GEPF) rules for the revised dispensation wereapproved, paving the way for the implementation.The Division has had to embark on an additional project emanatingfrom a Government Instruction to implement PublicService Co-ordinating Bargaining Council (PSCBC)Resolution 7 of 1998 and Resolution 12 of 2002 relating topension restructuring. Command Body sanction has beengranted for the Division to continue with the implementationof these Resolutions within the DOD. Services and Divisionsprovided personnel to form part of a Task Team to serve andassist with the roll-out of the Pension Restructuring Project.Subsequently, the Task Team has held a number of meetings,primarily to discuss strategy, training venues, time framesand funding of the Project that will include countrywidetraining.The Interim Defence Force Service Commission (IDFSC)crafted a Programme of Action and embarked on the followingactivities during the reporting period:The process of advising the Minister on the organisationalstructure of the Defence Force ServiceCommission and the Draft Defence Force ServiceRegulations.ANNUAL REPORT FY 2010/2011 33
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