Finance Annual Report 2007-2008 - Gauteng Online

Executive SummaryExecutive Summary

GAUTENG TREASURY ANNUAL REPORT • Executive Summarypublic funds, the Gauteng Treasury continues to play an important roletowards the achievement of the provincial government’s strategic priorityof building an effective and caring government.The establishment of the Gauteng Treasury as a separate department hasalso gone a long way in increasing our focus towards assisting GPG departmentsto align their budgeting and spending to provincial priorities.The Gauteng Treasury together with the Department of Local Governmentcontinues to assist municipalities with the implementation of theMunicipal Finance Management Act, budgeting and the general managementof their finances. We are also capacitating municipalities bymaking available to them skilled professionals to assist in strengthen theirfinancial management capacity. Collectively these interventions are inline with our overall commitment to make local government work betterand to improve service delivery.SECTION IExecutive SummaryFOREWORD BY THE MECThis is the second Annual Report of the Gauteng Treasury which becamea separate department from the Department of Economic Developmentin 2006. To us this is a significant development as it indicates that ourprovincial Treasury has indeed come of age. It also indicates that ourefforts to build the necessary capacity to ensure effective financial management,budgeting and planning across GPG departments continue togather momentum.Through the Public Private Partnerships Unit of the Gauteng Treasury weare making considerable progress in enhancing service delivery throughpartnerships with the private sector. Through the work of this unit weare able to leverage private sector funding to fund strategic projects andinitiatives that have a potential to change the lives of our people for thebetter.As the Gauteng Treasury we re-affirm our commitment to promoting bestpractice in the management of public funds and strengthening financialmanagement capacity within GPG and in municipalities. This we are doingin order to achieve operational efficiency and promote accountabilitywithin the provincial government and in municipalities.I wish to take this opportunity to thank the management and staff of theGauteng Treasury for the good work they continue to do to contributetowards our overall objective of building a better life for all.Through its commitment to transparency and efficient management of3

GAUTENG TREASURY ANNUAL REPORT • Executive SummaryHEAD OF DEPARTMENT REPORTIn this report, we account on our achievements against our role andmandate, i.e. to promote good governance by providing stewardship onall financial matters in the province. This entails amongst other things,effective allocation of resources to areas that support economic developmentand job creation, as well as social service delivery in the province.Specific allocations to strategic focus areas have ensured a contributiontowards provincial priorities (GDS Funding, Gautrain, Gauteng on-line,Top 20 Priority Townships, etc.)We remained committed to the objective of ensuring that by 2009, allGPG Departments receive unqualified audits and in this regard we appreciatethe fact that for the 2006/07 financial year, 12 out of the 13provincial GPG departments received unqualified audits. Treasury developedand implemented a Gauteng Provincial Government Risk ManagementPolicy and Risk Management Standards were defined. Through theassistance of Gauteng Treasury, asset management strategies were successfullyimplemented by GPG departments, including a project wherewe assisted Departments in valuing all assets with R1 value in their assetsregisters. We further provided financial management support to GPGdepartments through the re-introduction of the Chief Financial Officers’forum which meets quarterly. The main purpose of the forum isto share information on policy developments and effective implementationof budgeting, supply chain management, financial accounting, cashmanagement, risk management, asset management and other financialmanagement related matters. The Provincial Audit Committee was establishedduring the 2007/08 financial year to ensure a common approachto transversal issues and Gauteng Treasury continued providingadministrative and secretarial support to the 4 cluster audit committees.Gauteng Treasury further provided direct financial support to NokengTsa Taemane local municipality in an effort to strengthen the municipality’sfinancial management capacity. In addition; we continued to provideGenerally Accepted Municipal Accounting Practice (GAMAP) and GenerallyRecognised Accounting Practices (GRAP) institutional support to allthe delegated municipalities. The number of municipalities that GautengTreasury works with, have increased from eight to eleven. One of theoutcomes that we hope to achieve by working with municipalities is thatall Gauteng municipalities should receive unqualified audit reports.During the 2007/08 financial year we completed a feasibility study onprovincial taxation. A decision whether to proceed with the implementationthereof or not will be made in the coming financial year. The firstprovincial Social Accounting Matrix (SAM) which serves as a benchmarkfor economic and social data and an analysis report was completed. Theanalysis provides an overview of the link between the economic and socialsector of the economy and indicates how income is distributed acrossdifferent players within the provincial economy. In addition, two quarterlyeconomic bulletins were completed and circulated.Through various engagements with provincial departments and the ExecutiveCouncil which included the Budget Forum, Medium Term ExpenditureCommittee hearings and Premier Budget Committee, GautengTreasury timeously tabled the 2007/08 Adjustment Budgets and the2008 MTEF Budget. These allocations are aligned to the provincial andnational priorities.Gauteng Treasury’s role in providing oversight, guidance and strategicsupport to departments with regard to financial resource management,the Public Finance Unit was successful in introducing a set of measuresto improve budget preparation, implementation, monitoring and reportingprocesses at a departmental level. Such measures include, amongstothers, a phased-in approach to the utilization of analytical techniques,introducing the requirements for programme planning on the basis ofbusiness case for each proposal, implementation and monitoring plansand support departments to improve the quality of non-financial andfinancial reports for infrastructure spending, in Year Monitoring and conditionalgrants. We successfully implemented the Infrastructure DeliveryImprovement Programme which seeks to ensure that departments alignthe budget and infrastructure delivery cycle.A feasibility study for the expansion of the Chris Hani Baragwanath Hospital(as a Public Private Partnership Initiative) has been completed andpresented to National Treasury for approval.5

Looking at the year aheadMuch work has been undertaken in the past year to promote good governanceon all financial matters in the province. Gauteng Treasury willcontinue exerting its efforts to assist departments and municipalities toensure that they achieve unqualified audit reports. Furthermore, thedepartment will streamline reporting processes to ensure more focus isgiven to service delivery.It is crucial that we align the planning and budgeting processes for theprovince and municipalities to ensure intergration of programs and alsoin line with building Gauteng as a Globally and Competitive Region.The department will enhance the implementation of an enterprise-widerisk management strategy for the province. We will ensure that assetmanagement strategies are implemented in all provincial departmentsthrough approved asset policies.Since we are entering the last year of the current term of office, GautengTreasury will be formulating its new strategic plan for the period 2009 –2014. We believe that we will be able to strengthen our efforts aimed atensuring that Gauteng Treasury makes its contribution towards successfulcompletion of the current term of governance and the implementationof the GPG five year strategic plan and the realisation of our visionfor 2014; halving poverty and unemployment.6

Departmental OverviewDepartmentalOverview

GAUTENG TREASURY ANNUAL REPORT • Departmental OverviewThe mandate of Gauteng Treasury is to promote good governance by providingstewardship on all financial matters in the province. In essence, therole of Gauteng Treasury is to ensure that strategies are funded throughprojects and other initiatives are aligned to the provincial priorities andthe principles of Batho Pele. This entails, among others, the following:• Supporting and demonstrating the alignment to provincial priorities• Effective allocation of resources to areas that support economicdevelopment and job creation, as well as social service delivery inthe province• Create value for money by providing technical assistance andanalysis to spending agencies through efficiency studies, costbenefitanalysis and the Social Accounting Matrix• By promoting transparency and access to information throughpublications such as the Medium-Term Budget Policy Statement,the Budget Statement and budget inserts in the local newspapersduring the budget speech.Constitutional MandateThe role, responsibilities and functions of Treasury are defined in Chapter13 of the Constitution of South Africa.SECTION IIDepartmental OverviewMandate and role of TreasuryA provincial treasury musta) prepare the provincial budget;b) exercise control over the implementation of the provincialbudget;c) promote and enforce transparency and effective manage-ment in respect of revenue, expenditure, assets and liabilitiesof provincial departments and provincial public entities; andd) ensure that its fiscal policies do not materially and unreason-ably prejudice national economic policies.Legislative and other mandates• The Division of Revenue Act provides for the equitable division ofrevenue raised nationally, inclusive of conditional grants, amongstthe three spheres of government and matters incidental thereto• The Basic Conditions of Employment Act, 1997 that provides regulatoryprescripts in addition to the Public Service Act, 1994 andthe Public Service Regulations, 2001 regarding the conditions ofemployment of staff in Treasury• Borrowing Powers of Provincial Government Act, 1996 that providesnorms and conditions which the Treasury must adhere toin negotiating loans for the Provincial Government• Employment Equity Act, 1998 that regulates the processes andprocedures of the Treasury in achieving a diverse and competentworkforce broadly representative of the demographics of Gautengand eliminating unfair discrimination in employment towardsimplementing employment equity.9

• Intergovernmental Fiscal Relations Act, 1997 that defines the roleof the MEC of Finance and in promoting co-operation betweenother spheres of government on fiscal, budgetary and financialmatters• Labour Relations Act, 1995 that regulates and guides the Treasuryin recognizing and fulfilling its role in effecting labour harmonyand the democratization of the workplace• Municipal Finance Management Act, 2004 that supports andmonitors financial management in municipalities• Municipality Systems Act, 2000 and the Development FacilitationAct, 1995 that supports and monitors municipal IntegratedDevelopment Planning (IDP) processes• Preferential Procurement Policy Framework Act, 2000 that providesa framework for implementation of preferential procurementpolicy• Promotion of Access to Information Act, 2000 that gives effectto the constitutional right of access to any information held bythe State and any information that is held by another person andthat is required for the exercise or protection of any rights; and toprovide for matters connected therewith• Public Finance Management Act, 1999 that regulates financialmanagement in the Gauteng Treasury to ensure that all revenue,expenditure, assets and liabilities are managed efficiently and effectively;provides for the responsibilities of persons entrustedwith financial management in Treasury and provides for mattersconnected therewith• Public Service Act, 1994 that provides for the organization andadministration of the Gauteng Treasury and for human resourcemanagement which includes the regulation of conditions of employment,terms of office, discipline, retirement and discharge ofstaff members and matters connected therewith.Effective allocation of resources to areas that support economic developmentand job creation, as well as social delivery in the provinceCreate value for money for providing technical assistance and analysis tospending agencies through efficiency studies, cost-benefits analysis andSocial Accounting MatrixBy promoting transparency and access to information through publicationssuch as the Medium Term Budget Policy Statement, the BudgetStatement and budget inserts in the local newspapers during the budgetspeech.Monitoring MechanismDepartment Monitor MechanismGauteng TreasuryFinance StandingCommitteeGautengLegislatureNational TreasuryAuditor GeneralDepartment ofLabourOversightOversightMonitoring, Evaluationand ReportingAnnual FinancialStatementsReporting (EmploymentEquity)Good governance legislative responsibilitiesThe mandate of Gauteng Treasury is to promote good governance byproviding stewardship on all financial matters in the province. In essence,the role of Gauteng Treasury is to ensure that strategies are fundedthrough projects and other initiatives which are aligned to the provincialpriorities and the principles of the Batho Pele. This entails, amongstothers, the following:Supporting and demonstrating the alignment to provincial prioritiesOffice of thePremierPSETA (trainingand development)ReportingReporting (Workplaceskills plan)10

Performance ReportPerformanceReport

GAUTENG TREASURY ANNUAL REPORT • Performance Report• Strengthening financial management capacity to achieve operationalefficiency and promote accountability in government• Attracting and retaining an appropriate technical skills base atGauteng Treasury• Providing technical assistance including analysing, monitoring,evaluating and advising customers to• enable good financial planning and management• Developing and implementing efficient internal systems and processes• Investing in and empowering Gauteng Treasury employeesValuesValuing our EmployeesWe value our employees and believe in providing opportunities for employeesthrough career pathing, developing skills and empowerment ofemployees. We further value recognising and rewarding employees andtreating them fairly and equallyHonesty and IntegrityWe will represent information transparently and truthfully and will honourour commitmentsSECTION IIIPerformance ReportMission, Vision and ValuesMissionGauteng Treasury aspires to be pioneers in financial management andfiscal discipline within the public sector in South Africa.VisionTo provide custodianship & distribution of Public Funds as well as qualityFinancial Management Services through:Customer FocussedWe will place customers first by addressing their requirementsTeamworkCommunication and mutual adjustment to achieve common goals areimportant and will be visible through reliability, willingness to participateand providing support to team membersRespect and DignityWe will treat others with sensitivity and consideration to their uniqueness.We will treat others with mutual respect despite personality differencesWork EthicWe will endeavour to produce quality outputs in the midst of professionalismand productivity. We will take responsibility and ownership to theobligations vested in their position.13

OrganogramMECPaul MashatileHODNomfundo TshabalalaProgramme 1AdministrationProgramme 2Sustainable ResourceManagementProgramme 3Provincial FinancialManagement ReformsProgramme 4Provincial FinancialManagement andGovernance• Management Services• Corporate Services• PPP• CFO’s Office• Budget Management• Economic & Fiscal Policy• Public Finance• Norms and Standards• Municipal Budgets andCompliance• Municipal Accounting• Assets & Liabilities• Financial Accounting• Risk Management• Fixed Asset Management14

GAUTENG TREASURY ANNUAL REPORT • Performance ReportPERFORMANCE PER PROGRAMMEPROGRAMME 1AdministrationPurposeThe purpose of the programme is to co ordinate programme activities,provide strategic direction to ensure achievement of the Treasury mandateand offer support functions such as financial management, humanresource management, communication and information technologyThe programme comprised three sub programmes:• Management Services• Corporate Services• PPP• Financial Management (Office of the Chief Financial Officer)Strategic ObjectivesThe key strategic objectives for the programme are:• To integrate policies within Treasury to ensure synergies and effectiveco-ordination.• To drive the departmental strategy.• To facilitate, enhance and complement provincial revenue throughprivate investment in infrastructure and service delivery• To provide required support to enhance delivery in terms of financialmanagement, human resource management, communicationand information technology serviceKey Achievements 2007/08Office of the Head of DepartmentThe Office of the Head of Department continued to provide overallleadership and direction to the Department. Relevant management andcommunication structures have been established (e.g. Top management,senior management and extended management meeting structures). Interactionwith all staff members in Treasury also took place in the formof Treasury staff meetings.The Strategic Plan for Gauteng Treasury was reviewed during the periodunder review and the department underwent an exercise of assessing itsMonitoring and Evaluation readiness in conjunction with the Office ofthe Premier. Recommendation made as part of the project will be implementedin the course of the 2008/09 financial year.The structure of the Head of Department’s Office has also been reviewedduring the previous financial year which resulted in the creation of additionalcapacity that will be focusing on strategic- and operational supportto the Head of Department.Corporate ServicesHR and Auxiliary ServicesDuring the year under review, the department completed processes ofdeveloping and approving an HR strategy and HR plan, EmploymentEquity Plan, Retention Strategy and a Recruitment Procedure Manual.These documents will all play a major role in assisting the department torecruit and retain its’ critical and scarce skills.The Department also launched an Employee Wellness Programme andsuccessfully marketed the programme with all employees, to an extentthat the department has the highest utilisation rate in the province –mostly for proactive, preventative purposes. Gauteng Treasury commencedprocesses to develop an Employee Wellness strategy which isinformed by earlier Health Risk and Behavioural Risk Assessments.The departmental Reward and Recognition Programme was introducedin the department, and awards were given in line with the programme.Gauteng Treasury was able to move closer to the employment equitytarget of 50% females in SMS positions by 31 March 2009, by achievingits’ own target of 40% of females in SMS positions by 31 March 2008.Overall, female representation in the department is 58%.The department successfully implemented an Internship Programme with15% of the staff establishment being comprised of interns by 31 March2008. Apart from on-the-job training, the Interns were also exposedto soft-skills training to prepare them for the job market. Training programmesincluded interview preparation, personal budgeting, customerservice, etc.15

New bursaries were awarded to 24 employees and bursaries for 23 existingbursary holders were renewed. Bursaries were also awarded to10 full-time students, who will all eventually join the department in anInternship Programme.The department concluded a skills audit process which informed trainingprogrammes for all employees. The department also commenced processesto develop a competency framework for functional competencies.This framework will form the basis of future skills audits, skills developmentinterventions, recruitment and retention.All areas of HR compliance; including Senior Management Financial Disclosure,Employment Equity reporting, entering into performance agreements,job evaluation and grievance and misconduct reporting werecomplied with in line with the requirements.Since Gauteng Treasury currently still shares the building (94 Main Street)with the Department of Economic Development, the Facility and LogisticalSupport functions were mainly performed by the Logistical SupportUnit of the Department of Economic Development, in close liaison withthe Directorate: HR and Auxiliary Services in Gauteng Treasury. Preparationsfor the move to the GPG Kopanong Precinct Office commenced inconjunction with the Precinct Project Office and Public Works.CommunicationsA fully fledged Communications Unit was established in the course ofthe period under review.To achieve a coherent and consistent look of all the communication activitiesof the department, a new corporate style was developed. Thecorporate style is used on the fax, reports, memo templates, and Power-Point presentation templates.Internal Communication was centralised by introducing an internal electronic(e-mail) communiqué system.A Gauteng Treasury website (www.treasury.gpg.gov.za) was developedand is updated on a weekly basis. The Directorate produced a numberof publications including the 2006/07 Annual Report, Gauteng TreasuryInformation Brochure and the unit also coordinated all the departmentalevents. To profile and market the department, the directorate exhibitedat various events including the Budget Day (February 2008) and RandShow (March 2008).Furthermore, the directorate provided a media liaison support to the departmentby preparing press releases, preparing speeches for the MECand the HOD, press conferences and media lock up sessions.Information TechnologySince Gauteng Treasury still shared an information technology infrastructure(local area network, servers, etc.) with the Department of EconomicDevelopment, the IT Unit was only established in the latter part of the 4 thquarter under review.The first phase, namely the business architecture phase, of the IntegratedMaster Systems Plan (IMSP) Project that was coordinated by the GSSC ata provincial level, was successfully completed during the period underreview.Public Private Partnership (PPP)Progress was made by the unit on the following new initiatives:New built schools, refurbishment and sanitation project pre-feasibilitystudy process is underway.The unit made a presentation to the Department of Education on fundingoptions in an attempt to find a solution to address infrastructurebacklogs in schools and sanitation. The outcome of this initiative resultedin an approval to carry out a high level pre-feasibility study to determinethe affordability as well as most appropriate procurement and fundingoption for the project.The registration process of Legislature Precinct project as a possible PPPinitiative was finalised with National Treasury.Various engagements with the legislature have resulted in an approvalfor the appointment of a Transaction Advisor to determine the most appropriatefunding and procurement method.The directorate implemented a communication plan meeting with all relevantdepartments and stakeholders to establish ways of relieving thecurrent fiscus through PPP developments and private finance support.Significant progress can be reported in the Health and Education fieldthrough the new Schools Development, as well as new build & refurbishmentof Baragwanath Hospital as well as the 5 (five) district hospitals.A breakthrough in regulating PPP’s on local level can also be reported16

GAUTENG TREASURY ANNUAL REPORT • Performance Reportwith specific reference to two new registered municipality initiatives beingthe:• City of Tshwane Monitorial project’s Request For Proposal stage;• Joburg Waste Technology Project.In support to the above strategic intervention has taken place to recruitnew staff in the technical, legal and financial desks in the Unit. Successfulappointments have been made in the legal as well as financial field tosupport the Unit’s regulatory role.Financial Management (Office of the Chief Financial Officer)In order to maintain a high level of service delivery, the Supply ChainManagement improved from the previous financial year by implementinga proper asset management system. Training was conducted with allunits with regards to procurement processes. The financial accountingunit has improved on debt management and ledger accounts. Suspenseaccounts were cleared monthly.Gauteng Treasury submitted an Annual Report for 2007/08 includingfinancial statements with no qualifications reported by the Auditor-General.Monthly monitoring of expenditure against budget improved afterthe unit introduced monthly expenditure meetings with all programmemanagers. Quarterly performance reports were submitted to the BudgetManagement unit on time.PROGRAMME 2Sustainable Resources ManagementPurposeThe main purpose of this programme is to optimise resources allocation,utilisation and revenue in order to maximise the net social benefit toGauteng citizens.The programme consisted of three sub programmes:• Budget Management• Public Finance• Economic & Fiscal AnalysisStrategic ObjectivesThe key strategic objectives for the programme are:• To provide provincial social and economic research and analysisthat informs fiscal policy development and the annual budgetprocess contributing to the provincial growth & developmentstrategy• To allocate resources in line with provincial government prioritiesand 5 year plans to contribute to economic, efficient and effectiveservice delivery (credible budgets)• To maintain fiscal discipline through policies and the monitoringand evaluation of financial performance• To provide strategic leadership, technical and strategic support infinancial management and budgetingKey AchievementsBudget ManagementThe unit conducted a thorough review of the entire budget process andcommenced preparations for the development of an electronic systemfor the budget database and budget data warehouse. The electronicdatabase and data warehouse system builds upon and strengthens theinformation that is currently stored in various Excel spreadsheets. Thiselectronic system will certainly assist and support Gauteng Treasury inplanning, organizing, analyzing and decision making. Work is alreadyunderway to ensure the successful implementation of the projects andinclude (a) training of officials on Microsoft advanced excel and financialmodelling (b) benchmark exercise with the other treasuries (c) data clean-17

GAUTENG TREASURY ANNUAL REPORT • Performance Reportgenerating departments (DPTRW, DED, GT and DoH). All revenue reportswere presented to the revenue forum, which meets on the quarterlyreports.Engaged departments with regard to own revenue related mattersFormal and informal meetings were held with all GPG departments todiscuss issues related to revenue management. The meetings had beensuccessful in ensuring that issues that were identified on the In-YearMonitoring (IYM) analysis are addressed with the end result that departmentsdo not provide straight line revenue projections in their revenuebudgeting.Published the third Medium Term Budget Policy Statement(MTBPS)The provincial MTBPS explains the GPG objectives and goals by outliningthe policy framework for the main budget. This is an annual publication,the unit has managed to publish and table this report to the Legislature.Feasibility study on the introduction of provincial taxThe unit has managed to conclude on the first stage of researching onthe feasibility of this study. The assessment of this study was completedin 2007.Optimization of own revenueAs a way of trying to optimize own revenue, the unit together with theDepartment of Health has developed a revenue incentive agreement. Theincentive agreement is used to encourage the Department of Health tomaximize revenue collection. The unit has encouraged all revenue collectingdepartments to review their tariffs in line with the PFMA.Took part in the development of a revenue model with NationalTreasuryThe unit together with National Treasury had begun the process of developinga revenue model that will be used by all revenue collecting departmentsfor the forecasting of revenue.Public FinancePublic Finance performance is measured against the following key resultareas:• Oversight, guidance and input into provincial budgetary planning,development, implementation and analysis• Medium Term Expenditure Framework (MTEF) and adjustmentbudget sectoral analysis• Budget implementation quarterly assessment reports and monitoringof implementation of all conditional grants• Conducting efficiency, value for money and economic evaluationstudies• Monitoring and facilitating implementation of infrastructure deliveryimprovement programme model (IDIP)Significant positive strides have been made in financial resource management;Public Finance will continue to support departments in achievingtheir mandates by proving financial management expertise, advice andsupport as well as encouraging them to do proper planning. Proper planningwill lead to better budgeting which jointly, is intending to enhanceservice delivery.This unit is now almost fully capacitated with diverse skills including infrastructurespecialists. This has enabled the unit to provide strategic supportto departments in implementing the budget and improve service delivery.At a strategic level Public Finance was successful in introducing setof measures to improve budget preparation, implementation, monitoringand reporting processes at a departmental level. Such measures includeamong others a phase-in approach to the utilization of analytical techniques,introducing the requirements for programme planning on thebasis of business case for each proposal, implementation and monitoringplans and support departments to improve the quality of non-financialand financial reports for infrastructure spending, in Year Monitoring andconditional grants. Public Finance successfully implemented the InfrastructureDelivery Programme which seeks to ensure that departmentsalign the budget and infrastructure delivery cycle.Furthermore, the unit was successful in achieving the following specificoutputs:• Improved the quality of submissions and compliance with budgetprescript by ensuring that new budget reforms are factored intodepartmental budget inputs• Personnel model was developed for some sectoral departmentsand was used during the preparation for 2008 MTEF Budget• Analysis of 2008 MTEF National and Provincial Sector Budget Bidsundertaken and formal reports prepared for provincial MediumTerm Expenditure Committee (MTEC)• Adjustment budget analysis prepared for sectoral departmentscovering recommendations for rollovers, unforeseeable and unavoidableexpenditure and other adjustments19

• Supported sectoral departments with their year end processesDetailed analysis of the conditional grants and infrastructure reportswere prepared on time and presented at National Councilof Provinces• Prepared quarterly detailed expenditure reports incorporatingnon-financial information and completed Cabinet Memorandumstimeously for submission to the Provincial Executive• IDIP principles were rolled out to majority of infrastructure departmentsthrough the establishment of IDIP management structures• Infrastructure plan analysis report was completed and feedbackprovided to departments. Improved infrastructure plan was submittedto National Treasury• Completed a paper on financial and non-financial informationalsituational analysis informing service delivery and presented it atthe 1 st budget lekgotla• Developed a research outline for papers that will focus on thepotential benefits of hosting major international events, infrastructurefunding mechanisms as well as social infrastructure anddevelopment planning .PROGRAMME 3Provincial Financial Management ReformsPurposeThe purpose if this programme is to enhance and ensure effective andefficient implementation of financial reforms at both the provincial andlocal spheres of governmentThe programme comprised 3 sub programmes:• Norms and Standards• Municipal Budgets and Compliance• Municipal AccountingStrategic ObjectivesThe key strategic objectives for the programme are:• To ensure compliance with the Public Finance Management Actby provincial departments and municipalities• To ensure implementation and compliance with supply chainmanagement regulation by provincial departments and municipalities• To guide, monitor and asses annual reports, annual financialstatements, assets & risk management within municipalities inline with the provision of the Municipal Financial ManagementAct and other peripheral legislation• To ensure implementation and compliance with the MunicipalFinancial Management ActKey AchievementsThe Norms and Standards unit achieved the following milestones inthe 2007/08 financial year: -• The Financial Management Capacity Project was rolled out in GPGdepartments, 9 departments who took part in this Programmewere provided with funds to assist them with their training requirementsand also to augment capacity in the CFO supportstructures. Gauteng Treasury resource commitment under thisproject totalled R 5.4 million which was appropriated throughthe Provincial Adjustment Budget process.20

GAUTENG TREASURY ANNUAL REPORT • Performance Report• Audit Committee – we hosted five Audit Committee meetingsper Audit Committee cluster. The first Provincial Audit Committeewas convened which resulted in certain amendments madeto the Audit Committee Charter and these included:• A review to the Cluster committee composition; and• Outlining and defining the role of the Provincial AuditCommittee.• A Number of Supply Chain Management (SCM) training initiativeswere conducted with the assistance of SAMDI for ProvincialDepartments and Municipalities which included training of thefunctioning and awards from Bid Adjudication Committees.The Municipal Financial Accounting unit achieved the following milestonesin the 2006/07 financial year: -• GAMAP/GRAP conversion – Four municipalities were assistedsuccessfully to covert from fund accounting to accrual accountingand two other municipalities were assisted with preparationof annual financial statements. The remaining five municipalitieswere assisted with technical advice. An assessment has beencarried out on Annual financial Statements (AFS) submitted tothe Auditor General. In certain instances there were changes tothe AFS during the audit. We intend presenting the department’sassessment for 2007/08 on audited AFS and present to all delegatedmunicipalities.• Risk Management - a GAP analysis has been carried out to determinethe extent of risk management practices in delegatedmunicipalities. The review of risk management strategies will onlycarried out in the next financial year.The Municipal Budgets and Compliance unit achieved the followingmilestones in the 2007/08 financial year: -• During the current municipal financial year the Provincial Treasuryprovided direct financial support to Nokeng Tsa Taemane in effortto aid the municipality with its institutional challenges. Throughthis support Nokeng has already appointed a Chief Financial Officerand we look forward to the municipality establishing a Budgetand Treasury Office in line with the requirements of the MFMA.• In the advent of the Municipal Finance Management Act implementationframework drawing to a close the Provincial Treasurythrough various interventions will continue to contribute and enhancethe current institutional capacity of Municipal CFO Offices.This Treasury intends doing various pilot projects covering• Gauteng Municipal Intern Support Grant, and• Generic Budget Policies Framework and Operational Manuals.• For the financial year under review and as part of core oversightresponsibilities we continued to provide detailed technical andfinancial assessments in line with the requirements of the MFMAand the IDP engagement process as part of a joint working relationshipwith our sister Department of Local Government and asa key member to the Provincial Integrated Development PlanningCommittee on the following matters:• Integrated Development Plans and its alignment with MunicipalBudgets;• Municipal Budgets and its Budget Policy Framework for2008/2009;• Service Delivery & Budget Implementation Plans in line withtheir Integrated Development Plans & Performance Agreements.• The Municipal Support Plan – we continued to provide municipalitieswith critical hands on support in the area of financialmanagement, technical support and Revenue Management. Weare immersed in discussions with the Development Bank of SouthAfrica to assist in driving this institutional support programThe Municipal Fora• – through this ongoing initiative, Treasurycollectively with CFO’s in municipalities continues to drive improvementsentrenched in the Local Government MFMA FinanceReform agenda. These fora are aimed at driving MFMA relatedreforms throughout municipalities in Gauteng and ensuring thatuniform standards are applied in terms of municipal finance. Ona quarterly basis we have presented our technical assessments onall non-financial and financial MFMA returns at the District CFOForums. We have also held 2 very successful Municipal InternFora and in conjunction with National Treasury, we will drive the21

implementation of the FMG conditions framework which in themain funds the Municipal Finance Internship Programme.• Gauteng Municipal Financial Summit – During the 2007/2008period the Province has intensified its support to Gauteng Municipalitiesin addition to the current support framework establishedthrough the Gauteng Municipal Support Plan. The Gauteng MunicipalFinance Summit was co-hosted by Gauteng Treasury andthe Department of Local Government on the 19th July 2007. Thesummit was attended by the MEC for Local Government, SeniorOfficials from both departments, Mayors, MMC’s for Finance,Councillors, Chief Financial Officers and other officials from themunicipalities. Serious deliberations and discussions took placewhich ultimately resulted in resolutions being taken particularlyaround financial management, institutional and governance issues.In an effort to understand the current local governmentmilieu we have through the Gauteng Municipal Finance Summitengagements developed with our municipal counterparts andother key stakeholders in the Province key resolutions that wouldsee us enhancing municipal capacity over the next 2 years. Theseresolutions were tabled at the Premier Coordinating Forum forendorsement and subsequently adopted as a plan of action.PROGRAMME 4Provincial Financial Management and GovernancePurposeThe programme manages the Gauteng Provincial Government’s (GPG)multi-billion operational cash flow and negotiates agreements for bankingservices as well as investing surplus funds on behalf of the GPG tooptimize the Province’s revenue. It is also responsible for compiling consolidatedfinancial statements and submitting them to the Provincial Legislaturefor tabling. Another big focus for the programme is the provisionof support services to the departments in the areas of financial accounting,management of assets and risk management.The programme comprises the following sub programmes:• Assets and Liabilities• Financial Accounting• Risk Management• Fixed Asset ManagementSub ProgrammesAssets and LiabilitiesThe sub-programme is responsible for providing a range of banking activities,cash management and investment of surplus funds in the moneymarket on behalf of GPG. It also looks after the management of theProvincial Revenue Fund as well as managing risks related to funds invested.Financial AccountingIn terms of the Public Finance Management Act (PFMA), PFMG is responsiblefor preparing the consolidated annual financial statements inaccordance with the Generally Recognised Accounting Practices (GRAP).This sub programme is also in charge of preparing annual financial statementsfor the Provincial Revenue Fund, as well as providing guidanceand leadership to the GPG departments in terms of financial accountingpractices.Risk ManagementThe sub programme is responsible for implementing Enterprise wide RiskManagement (ERM) within GPG. This is to ensure that all organisations’risks such as operational, financial, compliance, regulatory and strategic22

GAUTENG TREASURY ANNUAL REPORT • Performance Reportrisks are encompassed in the management of risk in GPG.Asset ManagementThe Public Finance Management Act (PFMA) sets out many principlesthat constitute sound asset management. Many of these principles arenot yet imbedded in the asset management structures of the Public Sector.The major responsibility of this sub programme is to coordinate andguide the Departments across GPG in South Africa to not only comply tothe legislation as set out in the PFMA, but to ensure that asset managementis implemented efficiently and effectively.Key AchievementsAssets and LiabilitiesThe unit worked on strengthening the cash management in departmentsthrough interaction and training of departments. The training was providedon a one to one basis as well as through the cash managementforums that are held monthly. As a result a number of departments managedto achieve the variance of 5% between actual.Expenditure and funds requested was 9 out of 14, however the projectionsvariance still remains a challenge. The cash management systemwas not implemented as National Treasury has placed a moratorium onpurchasing of systems. However a request to purchase the system wassent to National Treasury but a response has not been received fromthem. Through the investments of surplus funds in the money market,the unit has managed to raise interest of R332m against a budget ofR240m and the diversification of the portfolio has always been maintainedas per the investment policy. Furthermore, the bank balanceshave been maintained at an average of R221m a year as a result of malfunctioningof systems in the first half of the financial year.Financial AccountingThe consolidated annual financial statements have not been finalised asyet due to the fact that audited annual financial statements of departmentsare used to compile the consolidated report. They will be preparedin June 2008. The audit opinion will only be known once thesestatements have been submitted to the Auditor General. The same explanationapplies to the Provincial Revenue Fund Financial Statements.Treasury together with the consultants conducted a Finance Function Effectiveness(FFE) exercise for all the departments of GPG. The purposeof this process was to identify which areas within the finance unit needimprovement so that a proper financial management capacity plan canbe introduced. The exercise was carried out for 11 departments.The purchase of the system to assist the unit in processing accountingtransactions of the Provincial Revenue Fund did not go ahead as planneddue to the fact that National Treasury has placed a moratorium on thepurchase of systems. The forums to discuss accounting matters with alldepartments have been run successfully and there has been tremendousimpact on the financial statements of the departments as a result. Theunit also achieved an unqualified audit opinion on the Provincial RevenueFund financial statements for 2005/06 and 2006/07.Risk ManagementDuring the 2007/08 financial year, the Enterprise Wide Risk Management(ERM) Policy for GPG was approved by the Gauteng Treasury HOD andfollowing that the ERM reform was also tabled at the HOD forum toobtain buy-in before the reform could be rolled out. In order to systematicallyimplement the reform, the ERM standards were developed anddistributed to departments. These standards list the main tasks of ERMwhich need to be carried out by all departments in GPG. In order to effectivelyand efficiently implement ERM, risk management forums wereintroduced and they are contributing positively to the effective managementof risk in GPG. Furthermore, training of Chief Risk Officers of thedifferent GPG departments was done to capacitate them and as at theend of 2007/08, only 9 departments had appointed Chief Risk Officers.We also developed the risk charters that govern risk management committees.Presentations on ERM were done at management meetings tocreate awareness on risk management and to obtain buy-in from seniormanagers within the departments. The reporting templates to monitorthe implementation progress of ERM were developed and training wasprovided on them.Asset ManagementAsset management strategy has been successfully implemented by provincialdepartments with the following milestones achieved:• Asset management teams have been established and are operationalin 13 out of 14 departments;• Asset management forums have been established and are operational;• Asset acquisition, maintenance and disposal plans are in place inall 14 departments, 10 are awaiting approval;• Asset policies are in place in all 14 departments;23

• Asset registers comply with minimum requirements;• Quarterly reporting to Legislature has been established.• Treasury assisted departments in valuing all assets with R1 value in the asset registers as per the implementation plans that were signed bydepartments.KEY OUTPUTSProgramme 1: AdministrationSub-Programme Measurable Objective Performance/ ServiceDelivery MeasureOffice of theChief FinancialOfficerProfessional financialaccounting support.Effective managementaccounting.Level of improvement in thequality of services rendered.Report and satisfaction withregard to quality output andtimeliness.Annual Target2007/08Compilation of reports onspending and performance ofa monthly basis.Monthly meetings withprogramme managers onspending patterns andprocurement issues.Actual Achievements Against TargetThe unit started giving feedback toprograms on spending and performanceand this continued on a monthly basis.Monthly meetings were held withprogramme managers to discuss spendingand procurement issues.Quarterly feedback was given on spendingto date and projected spending wascalculated for the remainder of the yearbased on updated procurement plans.Provision of supply chainmanagement support.Percentage compliance withset policy.100% compliance with theprocurement policy.Supply chain management training wasprovided to all programmes.Procurement reports from GSSC weremonitored and analysed on a daily basiswith immediate follow-ups.On-going monitoring of procurement andasset management that is in alignment topolicy.CorporateServices HumanResourcesManagement(HRM)Delivery and provisionof human resourcemanagement services,compliant to legislation.Reduction of the vacancyrate.Percentage jobs on theorganisational structureevaluated through jobevaluation.Reducing the vacancy rate to25% by march 2008.100% of posts to beevaluated.27.5% vacancy rate as at 31 March 2008.97% of all posts on the structure evaluated.The remaining 3% posts will be evaluatedin the following financial year and will thenbe filled.Progress made inimplementing provincialtargets for employmentequity/ representivity.Progress on implementingemployment equity:50% females at SeniorManagement Service (SMS)and 2% People with disabilityby 2009.40% Females at Senior Management level.0% People with disabilities.Due to the number of vacancies at SMSlevel for 2009, preference will be given tofemale candidates.Treasury had one employee with a disabilityin its employ in 2007 who resigned.Engagement with organisations thatspecialise in the recruitment of People withDisabilities is being undertaken in ensuringthat the target of 2% will be met by 2009.24

Sub-Programme Measurable Objective Performance/ ServiceDelivery MeasurePublic and PrivatePartnershipEffective facilitationof public and privatepartnerships that supporteconomic growth, jobcreation and povertyalleviation strategies.Identification of potentialnew PPP initiatives.Unique Gauteng Treasurycorporate brand.Development and distributionof Gauteng Treasurycorporate publications.Increase in support toregistered PPP projects.Increase in the number ofnew initiatives.Annual Target2007/08Development andimplementation of a GautengTreasury corporate brand.Actual Achievements Against TargetCorporate brand for Gauteng Treasurydeveloped and implemented. Ensuredconsistent branding of department’s name,logo and colours.2006/07 Annual Report, Informationbrochures and other publications weredeveloped, printed and disseminatedexternally.3 projects. Progress made on the funding options forthe Department of Education in an attemptto find a solution to address infrastructurebacklog in schools and sanitation. Theoutcome of this initiative resulted inapproval to carry out a pre-feasibility studybeing granted to evaluate the appropriateprocurement and funding approach onnew built schools and sanitation projects.Various engagements with legislature haveresulted in registration of the LegislaturePrecinct Project to undergo a PPP processto determine the appropriate funding andprocurement method.Support on the legality in listing theGautrain PPP initiative as a legal entity inline with the PFMA.3 new initiatives. Progress were made by the unit on thefollowing new initiatives:New built schools and sanitation projectpre-feasibility study process was underway.The registration process of LegislaturePrecinct project was finalised with NationalTreasury.Support in conducting a feasibility studyfor Treasury Approval I for Chris HaniBaragwanath Hospital.26

GAUTENG TREASURY ANNUAL REPORT • Performance ReportKeY OUTPUTSProgramme 2: Sustainable Resource ManagementSub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetBudgetManagementConsolidated MTEFindicative allocation letter.TimelinessWithin 2 weeks of BudgetLekgotla.Allocation letters for the final 2008 MTEFbudget submissions were initially issuedin November 2007 after the Novembersecond Budget Lekgotla and the finalallocation letters were issued in February2008.Treasury budget guidelinecircular development,distributed and workshophosted.TimelinessWithin 2 weeks of BudgetLekgotla.The budget forum was hosted on 30 and31 July 2007. All the departments werebeing trained on the Budget Circular.Provincial CabinetMemorandum on BudgetLekgotla distributed.TimelinessWithin 2 weeks of BudgetLekgotla.The Cabinet Memorandum was finalisedon 27 June 2007 and forwarded to theHead of Department for signature.Host National Treasuryvisits and participate inbenchmark exercise.Bilateral engagementsbetween National Treasuryand the province.2 visits per year and aBilateral Report.The first National Treasury visits werehosted on 26 and 27 July 2007. Thesecond visits were hosted on 19 and 20November 2007 and the related reportsubsequently submitted to NationalTreasury.Benchmark exercise was undertaken atNational Treasury on 15 January 2008.27

Sub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetTable annual and adjustmentbudgets.Conduct MTEC hearingswith Gauteng provincialdepartments.Submission of annual andadjustment budgets thatmeet the requirementsof National Treasury andProvincial priorities.Conduct MTEC hearings inSeptember 2007.100% compliance. The Budget Statement for the 2008/09MTEF was tabled on 28 February 2008 atthe Gauteng Provincial Legislature.The Adjustment Budget was tabled atthe Gauteng Legislature on 29 March2008 to accommodate the unforeseeableand unavoidable expenditure that hadbeen identified after the November 2007Adjustment Budget.Annual Budget tabled.First Adjustments Budget tabled inNovember 2007.Second Adjustment Budget was tabled on29 March 2008.MTEC hearings in Sept 2007. MTEC hearings were conducted from 20to 26 September.28

GAUTENG TREASURY ANNUAL REPORT • Performance ReportSub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetFiscal Policy andEconomic AnalysisInvestigate or assess newsources of revenue.Conduct feasibility study onProvincial Taxation.Complete Feasibility study.Feasibility study completed.Render advice on fiscalpolicy and determinethe medium term fiscalframework.Quarterly revenue reportsproduced.Head of Departmentand Budget Lekgotlapresentation.4 reports produced forLegislature and departments.4 reports were produced, monitored andevaluated.2 presentations per year. 2 Presentations were done, 1 in June and 1in November 2007.Medium-Term BudgetPolicy Statement (MTBPS)framework being finalisedand approved by thepolitical executive and seniormanagement.MTBPS chapters finalisedtimeously for publication.The 2007/08 MTBPS has been publishedand extensively distributed to governmentand non-governmental stakeholders.Before the publication of the finaldocument, a draft was presented at theBudget Lekgotla before members of thepolitical executive and senior management.Optimise own revenue forthe Province.Revenue forecasting modelutilised.Data submitted for a prototypemodel to NationalTreasury.The development of the Revenue Modelwas done in collaboration with NationalTreasury. National Treasury has not movedforward as other Treasuries has notsubmitted the data. This will be concludedin 2008/09.A proto-type Revenue model for theProvince was developed.Produce regular provincialeconomic review andoutlook reports.Analyse the potential andconstraint for Growth &Development in the province.Publish Economic quarterlybulletin.Economic quarterly bulletin published.Econometric Modelling trendand forecast analysis reports.Bi-Annual Reports published.Reports published. Incorporated in theProvincial Economic Review and Outlook(PERO).Annual publication of SocioEconomic Review.Publish a Socio EconomicReview Report.Socio Economic Review published.29

Sub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetPublic FinanceEnsure national andprovincial priorities arefunded.Identify critical issues andmake recommendations forpriorities to be funded in theMTEF process.Produce budget reports toMedium Term ExpenditureCommittee (MTEC) andbenchmark exercise.Budget review sessions with alldepartments need to take place early.However, there is still a lot of scope foradditional improvement. Improved thequality of Budget Statement 2 and 3.Assisted the Budget Management unitwith editing of budget statements.Budget and benchmark reports weregenerated and submitted to MTEC andNational Treasury.Optimum utilisation offunds.Quarterly detail expenditureand financial and nonfinancialperformance reportsgenerated.4 Quarterly detailexpenditure reports providedto EXCO and departments.4 Quarterly reports on technical adviceprovided to departments and EXCO.National Treasury BudgetGuide for 2008/09workshopped withdepartments.Compliance by departmentsto budget prescripts.Workshop held withdepartments.2008 budget framework implemented.Assisted all departments to comply withbudget prescripts.Monitor and co-ordinateinfrastructure delivery.Roll-out InfrastructureDelivery ImprovementProgramme (IDIP).Establish relevant structuresin departments.Reports on the infrastructure deliverywere provided to senior managementEstablished quarterly Political ProgrammeManagement Committee and ProgrammeTechnical forums.30

GAUTENG TREASURY ANNUAL REPORT • Performance ReportKEY OUTPUTSProgramme 3: Financial Management ReformsSub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetNorms andStandardsTake the lead role indeveloping financialmanagement skills andcapacity in the Province.Number of departments withproper structure and capacity.14 Gauteng Treasury has allocated R6.1million towards assisting departments withcapacity in the CFO support structures.The assistance covers two aspects, firstly,the proper structuring of CFO supportstructures and secondly, training issues.This is a continuation of the program fromthe previous financial year.Ensuring that Internal Auditand Audit Committeesare used effectively asrisk management tools indepartments.Monitor the implementationof recommendations ofinternal audit.All recommendations ofthe Audit Committee areimplemented.The recommendations of the AuditCommittee with regard to Internal AuditPlans, Audit reports and the quarterlyperformance of the departments wasdiscussed and later implemented by thedepartments and was reported to theFebruary/March Cluster Audit Committeemeetings.Progress report on the recommendationsof the Audit Committee which includednon-financial matters was presented to theFebruary/March Cluster Audit Committee.Ensuring compliance to thePFMA by departments andtheir public entities.Number of departmentsobtaining an unqualifiedaudit opinion.At least 10 of 14departments obtainingunqualified audit opinions.The Department of Economic developmentreceived a qualified audit opinion.13 departments received unqualifiedaudits.Managing dispensationmatters of the GautengProvince.Number of public entitiesobtaining an unqualifiedaudit opinion.Percentage adherence toService Level Agreement(SLA) turnaround times.5 of 8 public entities. Blue IQ obtained a qualified audit opinion.7 public entities received unqualifiedaudits.100% adherence to the SLA. All dispensation requests were processedwithin the agreed SLA times in the periodunder review.31

Sub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetMonitor governance issuesof public entities.Entities listed in Schedules 3Cand 3D of the PFMA.3 entities to be listed. Still in the process of finalising the listingof the Gauteng Enterprise Propeller andXhasa ATC as well as giving support in theinitial stages of the listing process for theGauteng Film Office.The listing file for the following entitieswas submitted to National Treasury -Gauteng Youth Commission and GautrainManagement Agency.Ensure implementation andcompliance to a SupplyChain Management policyfor departments andmunicipalities.Municipal Supply ChainManagement (SCM) policyadopted.All delegated municipalitiesmust have SCM policyadopted.The unit has in conjunction with NationalTreasury hosted several workshops to trainSCM officials in delegated municipalities aspart of its mandate.All delegated municipalities have drafted aSCM policy.Provide technical assistanceand training to departments.Number of financialmanagement assistance,training sessions, workshopsand presentations conductedwith the departments.1 event quarterly. 4 training sessions were conducted.MunicipalBudgets andComplianceEnsure implementationof the MFMA in allmunicipalities in Gauteng.Budget and Treasury Office(s)in municipalities established.6 out of 11 municipalities byyear-end.10 municipalities attained an acceptablelevel of compliance. However, it mustbe noted that a substantial amount ofsupport had to be provided to Nokeng TsaTaemane Local Municipality to assist themin setting up their Budget and Treasuryoffice. The unit provided the municipalitywith financial support in the amount ofR1,5 million.Three year municipal budgetcycle implemented.All delegated municipalitiesby year end.All 11 municipalities implemented a threeyear municipal budget cycle.Investment Policies adopted. Policies adopted annually. 8 out 11 municipalities have investmentpolicies that are documented and adoptedby Council with the 2007/08 budgetprocess, and submitted to GautengTreasury.32

GAUTENG TREASURY ANNUAL REPORT • Performance ReportSub-programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual achievements against targetEnsuring compliance withthe MFMA by municipalitiesand municipal entities.MFMA implementationplanned and reviewed.Annually by OctoberAll 11 municipalities complied by October2007.Budget evaluation checklistcompleted.Annually by JuneBudget evaluation checklist for budgetstabled and adopted for the 2007/08financial year was received from alldelegated municipalities.MFMA return for long termcontracts completed.QuarterlyAll delegated municipalities submittedtheir schedule of long-term contracts andanalysis were made on the returns. Thisanalysis was presented to the quarterlyCFO engagements held at district level.MFMA return for 12 urgentPriorities completed.QuarterlyAll delegated municipalities submittedtheir returns and the returns wereanalysed and presented to municipalitiesat the district CFO Forum.MFMA return for municipalborrowings.QuarterlyAll Delegated Municipalities submittedtheir borrowing returns, they wereanalysed and then submitted to NationalTreasury as prescribed.Transfers to LocalGovernment Gazetted.April and NovemberThe Municipal Transfer Frameworkemanating from the commitments inthe Main Budget was gazetted in linewith the provisions of DORA. The secondMunicipal Transfer Framework emanatingfrom commitments in the ProvincialAdjustment Budgets was gazetted inDecember 2007.33

Sub-programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual achievements against targetMonitor the preparation ofbudgets by municipalities.9 municipal budgets tabledand submitted timeouslyto Council and GautengTreasury.Draft budgets by Marchannually.Final Budget by May/Juneannually.All draft budgets were tabled on time andthe final budgets considered and adoptedbefore the start of the municipal financialyear.Municipal IDP’s &Service Delivery BudgetImplementation Plans(SDBIP’s) reviewed.Annually by September.All municipal IDP’s and SDBIP andembedded consultation frameworks havebeen evaluated and presented at thedifferent IGR Fora.Monitor the monthlyoutcomes of municipalbudgets.Municipal monthly in-yearreporting prepared andsubmitted to Council andProvincial Treasury.All delegated municipalities.All monthly reports were received withinthe 10th working day after the monthend. These were analysed and sent toNational Treasury within the prescripts ofthe MFMA.Providing municipal budgetand in-year reports andpublications.Consolidated statement onmonthly budget outcomessubmitted to ProvincialLegislature.Within 30 days of eachquarter’s end.4 consolidated reports were completedand submitted to the Legislature.Consolidated statement onmonthly budget outcomespublished in a ProvincialGazette.Within 45 days of eachquarter’s end.4 consolidated statements were publishedin the form of Provincial Gazettes.Providing technicalassistance and training tomunicipalities.Number of financialmanagement trainingsessions, workshops andpresentations conducted withthe municipalities.At least 2 workshops peryear.Training workshops were held with theMunicipal Financial Interns during August2007 and February 2008.MunicipalAccountingTimeous submission ofannual financial statements.Quality of audited financialstatement from themunicipalities in Gauteng.Audited financial statementsfrom all municipalities inNovember 2007.10 out of 11 municipalities submitted theiraudited financial statements in November2007.Assisting municipalities withthe implementation of GRAPstandards and the generalpreparation of financialstatements.Annual Financial Statementsdeveloped timeously in linewith GRAP standards.8 of 11 municipalities. 8 out of 11 municipalities developed theirAnnual Financial Statements timeously.34

GAUTENG TREASURY ANNUAL REPORT • Performance ReportSub-programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual achievements against targetMonitor and assess AnnualFinancial Statements ofmunicipalities.Annual Financial Statementsfor municipalities withoutentities prepared andsubmitted timeously toCouncil and ProvincialTreasury.All municipalities submittedby August 2007.11 municipalities submitted.Assisting municipalities informulating realistic RiskManagement Strategiesand monitoring theimplementation of thosestrategies.Risk management strategiesfor municipalities reviewed.Strategies for allmunicipalities reviewed.A GAP analysis was carried out todetermine the extent of risk managementpractices in delegated municipalities. Thereview of risk management strategies willonly be carried out in the next financialyear.35

KEY OUTPUTSProgramme 4: Financial GovernanceSub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetRisk ManagementGauteng Provincial RiskManagement Policy definedand implemented.Enterprise Risk Management(ERM) strategy andframework developed.Framework defined.ERM policy, framework and standards inplace within Gauteng Province.Submit risk reports toLegislature and NationalTreasury.Quarterly risk managementreports produced.Quarterly reports submitted.During the risk management reviewprocess, departments were provided withfeedback in terms of the progress reportssubmitted to Gauteng Treasury.The individual departments were thenprovided with advice on how to improveon their reporting going forward.National Treasury is in a process ofdeveloping reporting templates for theProvinces to report on implementationprogress.14 Quarterly reports submitted.Provide technical assistanceand training to the Gautengprovincial departments.Number of training sessions,workshops and presentationsconducted with departments.1 Session per quarter. 1 Risk Management Forum meetingwas held during the last quarter and thefollowing topics were discussed:Latest version of Barnowl and training tobe provided by GAS;Roles and responsibility of Chief RiskOfficer in terms of Internal Audit and howto manage the relationship;Learning from Local Governmentdepartment was discussed.The Risk Management process wasreviewed and looked at the following:36

GAUTENG TREASURY ANNUAL REPORT • Performance ReportSub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetAlignment between the risk profile andthe issues reported by the Auditor-Generaland internal audit;Governance structures that have been setup in departments i.e. Risk Managementcommittee, CRO, Approval of Frameworkby Head of Department;Fraud Prevention Plan;Awareness sessions;Inclusion of risk managementresponsibilities in the performancecontracts of managers;Business Continuity Planning.AccountingServicesSubmit consolidatedfinancial statements toauditors within 3 month ofyear-end.Timeous submission ofconsolidated statements.June 2007The consolidated annual financialstatements and provincial revenue fundstatements for the 2006/07 financialyear was submitted late to the Auditor-General due public service strike and nonavailability of the system for two months.Submit provincial revenuefund financial statements toauditors within 3 month ofyear-end.Unqualified audit opinion onthe Financial Statements.Unqualified opinion on theprovincial revenue fundstatements.Unqualified audit opinion. Unqualified audit opinion on revenuefund statements.AssetManagementAsset management strategyimplemented.Gauteng provincialdepartments with assetmanagement strategyimplemented.All assets accurately valuedand comply with assetsmanagement framework.14 departments have approved assetstrategies.13 of 14 departments have completedvaluation of assets.Asset registers comply with assetmanagement framework.37

Sub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetEstablishing assetmanagement units withright set of skills (allGauteng provincialdepartments).Number of units established. Teams established in all 14departments.13 of 14 departments have establishedasset management units.Provide asset managementtechnical assistance andtraining to the Gautengdepartments.Number of training sessionsconducted.At least 4 trainingintervention per annum.5 Training sessions conductedProcedures manual for asset managers hasbeen completed.Asset andLiabilitiesManagementVariance between fundsrequested, cash flowprojection and actualexpenditure not to exceed5%.Percentage variance betweenfunds transferred and actualfunds spent.Maximum 5% variancebetween funds transferredand actual funds spent.Daily variance analysis has been performedon a daily basis and guidance and trainingprovided to help departments improvetheir cash flow management.The province experienced systems glitchduring the second and third quarters thusaffecting the way the departments requestfunds. Departments could not accessBAS and PERSAL and as a result GautengTreasury used estimates to fund the PMGaccounts. The variance on cash flowprojections against actual expenditureis still a challenge as departments arestruggling with providing accurate figures.8 out 14 (57%) of departments met thetarget.38

GAUTENG TREASURY ANNUAL REPORT • Performance ReportSub-Programme Measurable Objective Performance/ ServiceDelivery MeasureAnnual Target2007/08Actual Achievements Against TargetTo make sure that thereis enough liquidity in theprovince.Daily cash balance in theExchequer account not toexceed R200 Million.Maximum Daily cash balanceof R200 million.Daily bank balances were maintainednot to exceed R200 million for certainmonths but the buffer was exceededduring certain periods in between thequarters. The maximum buffer that waskept as a set-off balance was influencedby the liquidity requirements and spendingpatterns of the departments. AverageR221million achieved.During the third quarter high levels ofliquidity were maintained for contingencypurposes due to the systems glitchexperienced in the province.The last quarter saw high maintenanceof liquidity due to increased spending bydepartments and the transfer of remainingbalances of the voted funds from theexchequer to the PMG accounts of thedepartments.Maintain a properlydiversified portfolio ofinvestments.Not more than 30% of thefunds invested should be heldby one bank.Maximum of 30% of fundsinvested per banks.The investment portfolio diversificationwas maintained properly with nocounterparty holding more than 30%of total funds invested, except forthe last month of the year where onecounterparty offering good investmentrate was left holding 44% of the totalfunds invested.Average 31% investment portfolio perbank achieved,that was due to the yearend processes where funds were calledback from counterparties to minimizeliquidity risk as the demand for cashpicked up momentum.Maximise generation ofinterest revenue for GautengTreasury.Interest revenue to meet atleast budgeted amounts.Interest revenue to meetbudgeted amount of R220million.Interest revenue collections for the yearamounted to R322 million against arevised revenue budget of R220 millionwhich translates into an over collectionof 46%.39

Annual Financial StatementsAnnual FinancialStatements

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2008Table of ContentsReport of the Accounting Officer 44Report of the Auditor-General 48Report of the Audit Commitee 57Accounting Policies 58Appropriation Statement 62Notes to the Appropriation Statement 72Statement of Financial Performance 73Statement of Financial Position 74Cash Flow Statement 75SECTION IVAnnual Financial StatementsGAUTENG TREASURY(VOTE14)Notes to the Annual Financial Statements 76Disclosures Notes to the Annual Financial Statements 84Annexures 8943

Report of the Accounting Officer1.General review of the state of financial affairsThrough appropriate resource allocations and efficacy in its application,Gauteng Treasury is committed to making contributions to the Acceleratedand Shared Growth Initiative of South Africa and enhancing thecompetitive edge of the Province to enable it to capitalise on the opportunitiesthat globalisation presents.The following external and internal challenges remain:• Reducing levels of unemployment and poverty.• Improving synergy between provincial departments and allspheres of government towards the realisation of Gauteng as theGlobal City Region.• Recruiting and retaining appropriately skilled personnel.In response to the above challenges, Gauteng Treasury achieved the following:• Ensured both national and provincial priorities are properly fundedwithin available resources.• Interacted with departments to improve resource allocations inresponse to socio-economic needs.• Engaged with all nine municipalities to enable proper rollout ofthe requirements of the MFMA legislation.• Succeeded in the recruitment of appropriately qualified individualsand provide financial support for further education and training.1.1 Major Projects Completed and Undertaken1.1.1 Completed projectsNumerous projects that were in progress in the year 2006/07 financialyear were completed during the 2007/08 financial year. These include:• A research study on the introduction of a provincial tax.• Approval of the Enterprise-Wide Risk Management policy forGauteng Provincial Government was approved.• Roll out of the financial management capacity project to all ninemunicipalities with view of capacitating municipalities delegatedfrom National Treasury.• Development of a social accounting matrix analysis report to pro-vide an overview of the link between the economic and socialsectors of the economy and income distribution across differentplayers within the provincial economy.• Publication of Provincial Economic Review and Outlook (PERO)report and Medium-Term Budget Policy Statement (MTBPS) wereproduced to analyse the provincial economy, the labour marketand socio-economic challenges to give direction to the 2008budget.• Implementation of the Provincial Asset Management strategywas successful and rolled out in all provincial departments.• Conversion of the GAMAP/GRAP project was completed for alldelegated municipalities.1.1.2 Projects undertakenThere were other major projects that were undertaken in the 2007/08 financialyear, in line with Gauteng Treasury’s stated objective of strengtheningfinancial management capacity to achieve operational efficiencyand that of providing technical assistance to departments. These included:• The finance function effectiveness assessment was done to identifywhich areas within finance units need improvement so that aproper financial management capacity plan can be introduced.• Development of a budget manual that will provide fundamentalsof the provincial budget process.• Development of an electronic budget database and data warehouse.• Detailed analysis of conditional grants and infrastructure reportsand roll out of IDIP model to all provincial departments.• Development of a personnel model for use in budget preparation.• Development of a Provincial Economic Model to do policy analysisthat assists resource allocation and project evaluation.• Significant progress made on the PPP projects initiated in the2006/07 financial year includes Chris Hani Baragwanath HospitalRevitalisation and Dinokeng and Cradle of Humankind’s complianceissues.1.2 Spending trendsIn the 2007/08 financial year Gauteng Treasury consolidated on the gainsmade during its first full year on existence. Its effective utilisation of itsallocated budget and achievements are an indication that the depart-44

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statementsment has pursued its mandate, vision and mission in the Gauteng Province.The total adjusted budget of the department increased from R44,5million in 2006/07 to R119.5 million in 2007/08 as shown in the tablebelow, indicating a higher level of responsibility that the province placedon the department. The department has utilised R111.9 million (93.6%)of this budget, thus effectively acquitting itself of its expected responsibilitiestowards the province and its people.2007/8 2006/7 % ChangeFinal Appropriation R119.5m R44.5m 267%Spending for the year R111.9 R42.1m 265.8%Under-spending R7.6 (6.4%) R2.4 (5.5%) 0.9%Vacancy rate 26 % 48.% (22%)Under spending of R7,634 million is primarily attributed to delayed projectsrelating to asset valuation in the Province. This under spendingtranslates to 6.4% of the Adjusted Budget.2. Services rendered by the department2.1 Under the powers vested in the MEC for Finance and EconomicAffairs as Political Head of Provincial Treasury, he is mainly responsible forthe execution of the functions and powers as prescribed in Chapter 3 ofthe PFMA. However, other legislative provisions in different national andprovincial acts and laws, including the MFMA add further responsibilities.Gauteng Treasury has both an advisory and facilitator role in the GautengProvincial Government that encompasses managing and overseeing theimplementation of Public Private Partnerships in terms of National Treasuryregulations. In addition, it also ensures sound financial managementin both provincial and local spheres of government.2.2 Free ServicesAll services rendered by Gauteng Treasury to other departments aremainly in terms of the PFMA or to municipalities in terms of the MFMAas alluded to in paragraph 2.1 above. No free services were rendered byGauteng Treasury.3. Capacity constraintsIn the 2007/2008 financial year, building capacity within treasury was akey priority. Through recruitment and selection efforts the departmentwas able to reduce the vacancy rate from 48% to 27%. The approvedstaff establishment on 31 March 2008 consisted of 167 posts (excludingthree posts additional to the staff establishment) with 46 vacancies,which is a significant reduction from the 78 vacant posts on 1 April 2007.One of the constraints that hindered the department in reducing thevacancy rate to the 10% target was the lack of available office space tosafely accommodate all employees.Although the department has managed to significantly decrease thevacancy rate during the period under review, it is believed that otherinterventions and programmes will further contribute in ensuring thatGauteng Treasury has sufficient capacity to deliver on its mandate. Onesuch intervention is the development and implementation of a vacancymanagement strategy in the 2008/09 financial year. A revised organisationalstructure is currently being finalised for implementation. The strategyentails a plan for each and every vacancy that exists on the structurein terms of when the department intends filling it and the process involvedin terms of recruitment (e.g. medium of recruitment). The HR unitfurther developed a recruitment framework in the 2007/08 financial yearthat informs the processes and timeframes for recruitment and selectionwhich also includes a service level agreement with business units in termsof deliverables.4. Utilisation of donor fundsGauteng Treasury did not receive any donor funding.5. Organisations to whom transfer payments have been madeTransfers payments were made to the Gauteng Fund Project Office forstarting up the Gauteng Infrastructure Fund and to Nokeng Tsa TaemaneLocal municipality to assist in building institutional capacity in the BudgetOffice of the municipality.6. Corporate governance arrangementsA consolidated risk profile that was completed in January 2008 is cur-45

ently being used as a departure point to manage and control risks facingthe department. A Fraud Prevention Plan compiled for the departmentin June 2007 is to be revised early in the 2008/09 financial year. A threeyear Internal Audit Plan was developed with the assistance of GautengAudit Services to ensure compliance with the Internal Audit charter forthe province. The Provincial Asset Management Strategy has been implementedsuccessfully by the department. Some of the desired effects ofthe above have been a shortened procurement turnaround time due toregular sittings of the Departmental Acquisition Council (DAC) and trainingon Supply Chain Management policies and procedures.7. Discontinued department activitiesThere are no discontinued departmental activities for the year under review.8. New departmental activitiesThe department has currently no new activities, except enhancing existingactivities to ensure effective and efficient implementation of ourstrategy.9. Asset managementQuarterly review meetings with senior management were held to discussdepartmental performance in order to improve decision making to enhanceservice delivery.Communication with various stakeholders was conducted via BudgetMakgotlas, Provincial Treasury Forums, MTEC hearings etc. to improvestakeholder service delivery and to accomplish the mandate of the department.The Performance Management and Development System (PMDS) inrespect of individual staff performance were successfully implementedduring the period under review and quarterly reviews were done on allemployees. All staff assessments for the 2007/08 period were concludedby mid May 2008. We have further placed emphasis on ensuring thatperformance work-plans of employees are aligned to the business andoperational plans of components.During the latter part 2007/08, an assessment that was coordinatedby the Premier’s Office on Monitoring and Evaluation Readiness, wasconcluded in Gauteng Treasury. Various findings and recommendationson, amongst others, monitoring and evaluation of organisational performancewere made in the report that will be attended to in the 2008/09financial year.The department has captured and reconciled all its assets, developed anasset management strategy and asset management policy together witha computer / laptop policy to ensure compliance with asset managementreform (AMR) milestones. All assets of the department were reconciledand unique asset numbers for verification and location purposes allocated.In future, the department aims to enhance asset managementthrough a proper asset demand and disposal plan in order to achieveincreased efficiency in the utilisation of the department’s assets.10. Performance InformationSpecific emphasis has been placed on ensuring the alignment of annualperformance plans (APPs) to strategic objectives of the organisation.Quarterly performance reports are submitted by all business units withinGauteng Treasury that are aligned to the annual performance plans. Financialperformance reporting is also being done on a quarterly basis, inline with the requirements of PFMA.46

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statements11. SCOPA ResolutionsApprovalReferenceto previousAudit reportand SCOPAresolutionsSubjectFindings on progressThe Annual Financial Statements set out on pages 40 to 91 have beenapproved by the Accounting Officer.Report no.258-2007: FourthSession, ThirdLegislatureRecommendation6.1Gauteng Treasuryto provide SCOPAby 31 January 2008with a progressreport regardingmeasures put inplace to ensure thatinternal controlsare complying withlegislation.Progress report wassubmitted by duedate and follow uppresentation made toSCOPA on the samesubject.All policies wereupdated to comply andbe in alignment withall legislation.Nomfundo TshabalalaGauteng Treasury Accounting Officer30 July 2008Report no.258-2007: FourthSession, ThirdLegislatureRecommendation6.2Treasury providesSCOPA by 31January 2008 witha progress reportregarding riskassessment.Progress report wassubmitted by duedate and follow uppresentation madeto SCOPA on thesame subject. Aconsolidated riskprofile and fraudprevention plan hasbeen completed, whichform the basis of theInternal Audit Plandeveloped for the nextthree financial years.47

REPORT OF THE AUDITOR GENERALREPORT OF THE AUDITOR-GENERAL TO THE GAUTENG PROVINCIALLEGISLATURE ON THE FINANCIAL STATEMENTS AND PERFORMANCEINFORMATION OF VOTE NO. 14: GAUTENG TREASURY FOR THE YEARENDED 31 MARCH 2008REPORT ON THE FINANCIAL STATEMENTS4)an opinion on these financial statements based on my audit.I conducted my audit in accordance with the International Standardson Auditing and General Notice 616 of 2008, issued inGovernment Gazette No. 31057 of 15 May 2008. Those standardsrequire that I comply with ethical requirements and planand perform the audit to obtain reasonable assurance on whetherthe financial statements are free from material misstatement.Introduction1) I have audited the accompanying financial statements of theGauteng Treasury which comprise the appropriation statement,statement of financial position as at 31 March 2008, statementof financial performance, statement of changes in net assets andcash flow statement for the year then ended, and a summary ofsignificant accounting policies and other explanatory notes, as setout on pages 58 to 92.Responsibility of the accounting officer for the financial statements2) The accounting officer is responsible for the preparation and fairpresentation of these financial statements in accordance with themodified cash basis of accounting determined by the NationalTreasury, as set out in accounting policy note 1.1 to the financialstatements and in the manner required by the Public FinanceManagement Act, 1999 (Act No. 1 of 1999) (PFMA) and Divisionof Revenue Act, 2007 (Act No. 1 of 2007 (DoRA). This responsibilityincludes:• designing, implementing and maintaining internal controlrelevant to the preparation and fair presentation of financialstatements that are free from material misstatement,whether due to fraud or error• selecting and applying appropriate accounting policies• making accounting estimates that are reasonable in thecircumstances.Responsibility of the Auditor-General3) As required by section 188 of the Constitution of the Republic ofSouth Africa, 1996 read with section 4 of the Public Audit Act,2004 (Act No. 25 of 2004) (PAA), my responsibility is to express5)6)7)An audit involves performing procedures to obtain audit evidenceabout the amounts and disclosures in the financial statements.The procedures selected depend on the auditor’s judgement, includingthe assessment of the risks of material misstatement ofthe financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal controlrelevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the entity’s internalcontrol.An audit also includes evaluating the:• appropriateness of accounting policies used• reasonableness of accounting estimates made by management• overall presentation of the financial statements.I believe that the audit evidence I have obtained is sufficient andappropriate to provide a basis for my audit opinion.Basis of accounting8) The department’s policy is to prepare financial statements on themodified cash basis of accounting determined by the NationalTreasury, as set out in accounting policy note 1.1 to the financialstatements.Opinion9) In my opinion the financial statements present fairly, in all materialrespects, the financial position of the Gauteng Treasury as at31 March 2008 and its financial performance and cash flows forthe year then ended, in accordance with the modified cash basis48

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statementsof accounting determined by the National Treasury, as set out inaccounting policy note 1.1 to the financial statements and in themanner required by the PFMA and DoRA.Matter of governance Yes NoAudit committeeOTHER MATTERSWithout qualifying my audit opinion, I draw attention to the followingmatters that relate to my responsibilities in the audit of the financialstatements:Non-compliance with applicable legislation10) Public Finance Management Act• A transfer of R1 500 000 was made to Nokeng Tsa TaemaneLocal Municipality without concluding a memorandumof understanding between the department and themunicipality as stipulated in Provincial Gazette No. 16 of2008. Furthermore, no monthly progress meetings wereconducted to ensure that the funds released by the departmentwere used for the intended purpose as requiredby Provincial Gazette No. 16 of 2008, which was also incontravention of section 38(1)(k) of the PFMA.• The department could not provide proof that prior writtenconsent was obtained from National Treasury for theestablishment of the Gauteng Fund Project Office, whichwas in contravention of section 38(1)(m) of the PFMA, readtogether with Treasury Regulation 19.4.1.The department had an audit committee inoperation throughout the financial year.The audit committee operates in accordancewith approved, written terms of reference.The audit committee substantially fulfilledits responsibilities for the year, as set outin section 77 of the PFMA and TreasuryRegulation 3.1.10.Internal audit• The department had an internal auditfunction in operation throughout thefinancial year.• The internal audit function operatesin terms of an approved internal auditplan.• The internal audit function substantiallyfulfilled its responsibilities for the year,as set out in Treasury Regulation 3.2.Other matters of governanceXXXXXX11)Treasury Regulations• The department did not pay certain suppliers within 30days as required by Treasury Regulation 8.2.3.The annual financial statements weresubmitted for audit as per the legislateddeadlines (section 40 of the PFMA).XMatters of governance12) The PFMA tasks the accounting officer with a number of responsibilitiesconcerning financial and risk management and internalcontrol. Fundamental to achieving this is the implementation ofcertain key governance responsibilities, which I have assessed asfollows:The financial statements submitted foraudit were not subject to any materialamendments resulting from the audit.No significant difficulties were experiencedduring the audit concerning delays or theunavailability of expected information and/orthe unavailability of senior management.XX49

Matter of governance Yes NoThe prior year’s external auditrecommendations have been substantiallyimplemented.SCOPA resolutions have been substantiallyimplemented.Unaudited supplementary schedules13) Annexure 1E, Statement of Conditional Grants Paid to municipalitiesincludes a column of amounts spent by the municipality. Ihave not audited this amount and accordingly I do not express anopinion thereon.XXOTHER REPORTING RESPONSIBILITIESREPORT ON PERFORMANCE INFORMATION14)I have reviewed the performance information as set out on pages13 to 39.Responsibility of the accounting officer for the performance information15) The accounting officer has additional responsibilities as requiredby section 40(3)(a) of the PFMA to ensure that the annual reportand audited financial statements fairly present the performanceagainst predetermined objectives of the department.Responsibility of the Auditor-General16) I conducted my engagement in accordance with section 13 of thePAA read with General Notice 616 of 2008, issued in GovernmentGazette No. 31057 of 15 May 2008.17)18)In terms of the foregoing my engagement included performingprocedures of an audit nature to obtain sufficient appropriate evidenceabout the performance information and related systems,processes and procedures. The procedures selected depend onthe auditor’s judgement.I believe that the evidence I have obtained is sufficient and appropriateto provide a basis for the audit findings reported below.Audit findings (performance information)Measurable objectives not consistent19) Measurable objectives are materially inconsistent between annualreport and strategic/annual performance plan.I draw attention to the fact that the measurable objectives reportedin the annual report of the Gauteng Treasury were materiallyinconsistent when compared with the predetermined objectivesas per the strategic/annual performance plan.50

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsThe following table reflects the material differences:Programme Objective per strategic / annual performance plan Objective per annual reportProgramme 2: Sustainable Resource ManagementFiscal policy & economic analysisBudget managementPublic financeRevenue strategy compiled & implemented.Partnerships with expert research institutions.Implementation of reforms supported.Budget process review and more effective budget methodsexplored and supported.Costing and other innovative projects.Provincial budget database (including both annual andadjustment budgets).Creation and utilisation of sectoral information for budgetingin the province.Benchmark bilateral meeting in January.Quarterly expenditure reviews.Presentation to legislature on provincial financial andeconomic performance.Provincial infrastructure spending & conditional grantsanalysed and reported.Review and finalise the provincial taxation report via informalconsultation with the South African Revenue Services.Analysis of in-year monitoring reports from all revenuegenerating departments.Conduct MTEC hearings with Gauteng provincialdepartments.Improved quality of departmental inputs to budget statementand submission on time.National Treasury Budget Guide for 2008/09 workshoppedwith departments.Interact with National Treasury and the budget managementunit regarding proposed budgetary reforms.51

Programme Objective per strategic / annual performance plan Objective per annual reportProgramme 3: Financial Management ReformsNorms and standardsSubmission of annual financial statements.Provide technical assistance and training to municipalities.Report on non complying departments.Departmental expenditure analysis and vendor procurementspend analysis (GSSC as an implementation agency).Delegation schedules evaluated & reviewed.Monitoring of municipal intern programme.Budget and financial policies reviewed and adopted.Municipal budget and MFMA returns evaluated anddeviations identified.MFMA implementation planned and reviewed.Budget evaluation checklist.Number of departments obtaining an unqualified auditopinion.Number of public entities obtaining an unqualified auditopinion.Percentage adherence to service level agreement (SLA)turnaround time.Response time to departmental requests or queries.Number of outstanding requests or queries at month end.Entities listed in Schedules 3C & 3D of the PFMA.NT Governance Reporting Framework implemented &adhered to.Ensure implementation and compliance to a Supply ChainManagement policy for departments and municipalities.Number of financial management assistance trainingsessions, workshops and/or presentations conducted with thedepartments.Provide municipal budget and in- year reports andpublications.Ensure municipal borrowings comply with legislativerequirements in terms of the MFMA.Number of financial management assistance trainingsessions, workshops and/or presentations conducted with themunicipalities.52

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsProgramme Objective per strategic / annual performance plan Objective per annual reportProgramme 3: Financial Management ReformsMunicipal budget managementMunicipal IDP’S & service delivery budget implementationplans reviewed.Assisting municipalities with the implementation ofGRAP standards and the general preparation of financialstatements.Municipal accounting Monitor and assess annual financial statements ofmunicipalities.Assisting municipalities in formulating realistic riskmanagement strategies and monitoring the implementationof those strategies.Supporting and integratedfinancial systemsFramework defined.Determine the requirements for and implement financialmanagement systems.Develop policy framework for the evolvement of efficientfinance management systems.Programme 4: Financial GovernanceAccounting services Asset management strategy implemented.Risk management Quarterly risk management reports produced.Number of training sessions, workshops and or presentationsconducted with departments.Asset and liabilities management Framework defined. Asset management strategy implemented.20)Measurable objectives are materially inconsistent between annual report and budgetI draw attention to the fact that the objectives reported in the annual report of the Gauteng Treasury were materially inconsistent when comparedwith the predetermined objectives as per the budget.53

The following table reflects the material differences:Programme Objective per strategic / annual performance plan Objective per annual reportProgramme 2: Sustainable Resource ManagementFiscal policy & economic analysisBudget managementPublic financeConsultative meetings with all GPG departments.Revenue forum meetings.Partnerships with expert research institutions.Research reports published.Social accounting matrix (SAM).Departmental budget bilaterals hosted.Accurate departmental budget statements produced andpublished.Implementation of reforms supported.Cost benefit analysis and linear programming tools introduced.Provincial budget database (including both annual andadjustment budgets.Stakeholder and public consultation.Oversight, guidance and input into budgetary planning,development, implementation and analysis.Sectoral and departmental policy advice provided.Expenditure and economic analysis conducted.Diagnostic exercise conducted.Feasibility study planned and implemented.Host National Treasury visits and participate in benchmarkexercise.Conduct MTEC hearings with Gauteng provincialdepartments.Improved quality of departmental inputs to budget statementand submission on time.National Treasury Budget Guide for 2008/09 workshoppedwith departments.Interact with National Treasury and the budget managementunit regarding proposed budgetary reforms.54

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsProgramme Objective per strategic / annual performance plan Objective per annual reportProgramme 3: Financial Management ReformsNorms and standardsConstant monitoring and review of financial misconduct,corrective measures and procedures institutionalised atmunicipalities.Establishment of municipal fora and all other Gauteng MFMAinitiatives.Assessment of quarterly withdrawal statements.Consolidated statement on monthly budget outcomessubmitted to Provincial Legislature.Financial systems policy developed.Municipal IDP’S & service delivery budget implementationplans reviewed.Ensure implementation and compliance to a Supply ChainManagement policy for departments and municipalities.Provide municipal budget and in- year reports andpublications.Ensure municipal borrowings comply with legislativerequirements in terms of the MFMA.Municipal accounting Timeous submission of annual financial statements.Assisting municipalities with the implementation ofGRAP standards and the general preparation of financialstatements.Monitor and assess annual financial statements ofmunicipalities.Assisting municipalities in formulating realistic riskmanagement strategies and monitoring the implementationof those strategies.55

Programme 4: Financial GovernanceAccounting servicesQuarterly financial reports produced and submitted.Number of training sessions, workshops and or presentationsconducted with departments.Risk managementReview of all existing risk management policies andstrategies in use in GPG departments and draft a plan for theimplementation and rollout of a provincial risk managementpolicy.Asset and liabilities managementAPPRECIATIONFacilitate the compilation of an annual risk assessment reportfor each GPG department, including recommendations andplan.Provide efficient banking services to GPG departments andmaintain good relationship with the incumbent GPG banker.Ensure compliance with PFMA.Quarterly cash flow reports produced.Asset management strategy implemented.Interest revenue to meet at least budgeted amounts.21)The assistance rendered by the staff of the Gauteng Treasury during the audit is sincerely appreciated.Johannesburg30 July 200856

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsREPORT OF THE AUDIT COMMITTEE – CLUSTER 1Gauteng TreasuryWe are pleased to present our report for the financial year ended 31March 2008.Membership and AttendanceThe Audit Committee consists of the members listed hereunder andmeets at least four times a year in line with its approved terms of reference.During the financial year under review five scheduled meetingswere held.Name of Member Designation Number ofMeetings AttendedDavid Hensman Chairperson 5/5Maud van Wyk Member 3/5Avhatakali KhampaMember (Resigned:05/03/2008)5/5Mohammed Dukander Member 4/5Nomfundo Tshabalala HOD Gauteng Treasury 1/5Mike MaileCEO Gauteng SharedService CentreAudit Committee ResponsibilityThe Audit Committee reports that it has complied with its responsibilitiesarising from section 38 (1) (a) of the PFMA and Treasury Regulation3.1.13. The Audit Committee also reports that it has adopted appropriateformal terms of reference as its audit committee charter, has regulatedits affairs in compliance with this charter and has discharged all it’sresponsibilities as contained therein.The Effectiveness of Internal Controls:The systems of internal control are substantially effective as the Departmentreceived an unqualified audit report. The report of the AuditorGeneral on the annual financial statements, including the matters of0/5emphasis and other reportable items and their management letter reportnon-compliance with prescribed policies and procedures at year-endregarding the PFMA and treasury regulations.In addition the Audit Committee while reviewing the annual financialstatements discovered discrepancies of R8 million in respect of “confirmed”inter- departmental balances between Treasury and DED arisingfrom Treasury not providing clear guidelines to all departments forconfirming year –end balances and resolving disputed transactions. Unresolveddifferences have negative implications for the provincial consolidationand also provide a potential loophole for departments to concealbudget overspending.An ongoing risk assessment was performed during the financial year underreview.The quality of In Year Management Reports submitted in terms of thePublic Finance Management Act and the Division of Revenue Act.The Committee is satisfied with the content and quality of quarterly reportsprepared and issued by the Accounting Officer and the Departmentduring the year under review.Evaluation of Financial StatementsThe Audit Committee has:• Reviewed and discussed with the Auditor General and the AccountingOfficer the audited annual financial statements to beincluded in the annual report;• Reviewed the Auditor General’s report and management letterand noted that there were certain issues raised resulting in materialadjustments to commitments and payables in the annualfinancial statements• Reviewed the adjustments made resulting from the audit.The Audit Committee concurs and accepts the conclusions of the Auditor-Generalon the annual financial statements and is of the opinion thatthe audited annual financial statements be accepted and read togetherwith the report of the Auditor-General.Chairperson of the Audit CommitteeDate: 20th August, 200857

ACCOUNTING POLICIESfor the year ended 31 March 2008The Financial Statements have been prepared in accordance with thefollowing policies, which have been applied consistently in all materialaspects, unless otherwise indicated. However, where appropriate andmeaningful, additional information has been disclosed to enhance theusefulness of the Financial Statements and to comply with the statutoryrequirements of the Public Finance Management Act, Act 1 of 1999 (asamended by Act 29 of 1999), and the Treasury Regulations issued interms of the Act and the Division of Revenue Act, Act 2 of 2006.1. Presentation of the Financial Statements1.1 Basis of preparationThe Financial Statements have been prepared on a modified cash basisof accounting, except where stated otherwise. The modified cash basisconstitutes the cash basis of accounting supplemented with additionaldisclosure items. Under the cash basis of accounting transactions andother events are recognised when cash is received or paid or when finalauthorisation for payment is effected on the system (by no later than 31March of each year).1.2 Presentation currencyAll amounts have been presented in the South African Rand (R) which isalso the functional currency of the department.1.3 RoundingUnless otherwise stated all financial figures have been rounded to thenearest one thousand Rand (R’000).1.4 Comparative figuresPrior period comparative information has been presented in the currentyear’s financial statements. Where necessary figures included in the priorperiod financial statements have been reclassified to ensure that the formatin which the information is presented is consistent with the formatof the current year’s financial statements.1.5 Appropriated fundsAppropriated funds are recognised in the financial records on the datethe appropriation becomes effective. Adjustments to the appropriatedfunds made in terms of the adjustments budget process are recognisedin the financial records on the date the adjustments become effective.Total appropriated funds are presented in the statement of financial performance.Unexpended appropriated funds are surrendered to the Provincial RevenueFund, unless approval has been given by the Provincial Treasury torollover the funds to the subsequent financial year. These rollover fundsform part of retained funds in the annual financial statements. Amountsowing to the Provincial Revenue Fund at the end of the financial year arerecognised as payables in the statement of financial position.1.6 Departmental revenueAll departmental revenue is paid into the Provincial Revenue Fund whenreceived, unless otherwise stated. Amounts owing to the Provincial RevenueFund at the end of the financial year are recognised as payables inthe statement of financial position.1.6.1 Sales of goods and services other than capital assetsThe proceeds received from the sale of goods and/or the provision ofservices is recognised in the statement of financial performance whenthe cash is received.1.6.2 Interest on bank accountsInterest on bank accounts is recognised in the statement of financial performancewhen the cash is received.1.7 Compensation of employeesSalaries and wages comprise payments to employees. Salaries and wagesare recognised as an expense in the statement of financial performancewhen the payment is effected on the system (by no later than 31 Marchof each year).All other payments are classified as a current expense.Social contributions include the employer’s contribution to social insuranceschemes paid on behalf of the employee. Social contributions arerecognised as an expense in the statement of financial performancewhen the payment is effected on the system.58

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statements1.7.1 Short term employee benefitsShort term employee benefits comprise of leave entitlements (includingcapped leave), thirteenth cheques and performance bonuses. The costof short-term employee benefits is expensed as salaries and wages in thestatement of financial performance when the payment is effected on thesystem (by no later than 31 March of each year).1.7.2 Long-term employee benefits1.7.3 Termination benefitsTermination benefits such as severance packages are recognised as an expensein the statement of financial performance as a transfer (to households)when the payment is effected on the system (by no later than 31March of each year).1.7.4 Post employment retirement benefitsThe department provides retirement benefits (pension benefits) for certainof its employees through a defined benefit plan for governmentemployees. These benefits are funded by both employer and employeecontributions. Employer contributions to the fund are expensed whenthe payment to the fund is effected on the system (by no later than31March of each year)No provision is made for retirement benefits in the financial statementsof the department. Any potential liabilities are transferred and disclosedin the financial statements of the National/Provincial Revenue Fund andnot in the financial statements of the employer department.The department provides medical benefits for certain of its employees.Employer contributions to the medical funds are expensed when the paymentto the fund is effected on the system (by no later than 31 Marchof each year).1.8 Goods and servicesPayments made for goods and/or services are recognised as an expensein the statement of financial performance when the payment is effectedon the system (by no later than 31 March of each year). The expenseis classified as capital if the goods and services were used for a capitalproject or an asset of R5000 or more is purchased. All assets costing lessthan R5000 will also be reflected under goods and services.1.9 Interest and rent on landInterest and rental payments are recognised as an expense in thestatement of financial performance when the payment is effectedon the system (by no later than 31 March of each year).1.10 Financial transactions in assets and liabilitiesDebts are written off when identified as irrecoverable. Debts written-offare limited to the amount of savings and/or underspending of appropriatedfunds. The write off occurs at year-end or when funds are available.No provision is made for irrecoverable amounts but amounts aredisclosed as a disclosure note.All other losses are recognised when authorisation has been granted forthe recognition thereof.1.11 Unauthorised expenditureWhen discovered, unauthorised expenditure is recognised as an asset inthe statement of financial position until such time as the expenditure iseither approved by the relevant authority, recovered from the responsibleperson or written off as irrecoverable in the statement of financial performance.Unauthorised expenditure approved with funding is recognised in thestatement of financial performance when the unauthorised expenditureis approved and the related funds are received. Where the amount is approvedwithout funding it is recognised as expenditure, subject to availabilityof savings, in the statement of financial performance on the dateof approval.1.12 Fruitless and wasteful expenditureFruitless and wasteful expenditure is recognised as an asset in the statementof financial position until such time as the expenditure is recoveredfrom the responsible person or written off as irrecoverable in thestatement of financial performance. This expenditure will only arise oncenecessary disciplinary processes and acknowledgement as fruitless havebeen completed.1.13 Irregular expenditureIrregular expenditure is recognised as expenditure in the statement offinancial performance. If the expenditure is not condoned by the relevantauthority it is treated as an asset until it is recovered or written offas irrecoverable.59

1.14 Transfers and subsidiesTransfers and subsidies are recognised as an expense when the paymentis effected on the system (by no later than 31 March of each year).1.15 Expenditure for capital assetsPayments made for capital assets are recognised as an expense in thestatement of financial performance when the payment is effected on thesystem (by no later than 31 March of each year).1.16 Cash and cash equivalentsCash and cash equivalents are carried in the statement of financial positionat cost.For the purposes of the cash flow statement, cash and cash equivalentscomprise cash on hand, deposits held, other short-term highly liquid investmentsand bank overdrafts.1.17 ReceivablesReceivables included in the statement of financial position arise fromcash payments made that are recoverable from another party.Revenue receivable not yet collected is included in the disclosure notes.Amounts that are potentially irrecoverable are included in the disclosurenotes.1.18 InventoryInventories purchased during the financial year are disclosed at cost inthe notes.1.19 Capital assetsA capital asset is recorded on receipt of the item at cost. Cost of anasset is defined as the total cost of acquisition. Where the cost cannotbe determined accurately, the capital asset may be stated at fair value.Where fair value cannot be determined, we will ensure we comply withthe asset management minimum requirements and guidelines providedby National Treasury.Projects (of construction/development) running over more than one financialyear relating to assets, are only capitalised as assets on completionof the project and at the total cost incurred over the duration of theproject.'1.20 LiabilitiesVoted funds to be surrendered to the Revenue FundUnexpended appropriated funds are surrendered to the Provincial RevenueFund. Amounts owing to the Provincial Revenue Fund at the end ofthe financial year are recognised in the Statement of Financial Position.Departmental revenue to be surrendered to the Revenue FundAmounts owing to the Provincial Revenue Fund at the end of the financialyear are recognised in the statement of financial position at cost.PayablesRecognised payables mainly comprise of amounts owing to other governmentalentities. These payables are recognised at historical cost in thestatement of financial position.Lease commitmentsLease commitments represent amounts owing from the reporting dateto the end of the lease contract. These commitments are not recognisedin the statement of financial position as a liability or as expenditure inthe statement of financial performance but are included in the disclosurenotes.Operating and finance lease commitments are expensed when the paymentsare made.CommitmentsCommitments represent goods/services that have been approved and/orcontracted, but where no delivery has taken place at the reporting date.Commitments are not recognised in the statement of financial positionas a liability or as expenditure in the statement of financial performancebut are included in the disclosure notes.1.21 Key management personnelKey management personnel are those persons having the authority andresponsibility for planning, directing and controlling the activities of thedepartment. Compensation paid to key management personnel includingtheir family members where relevant, is included in the disclosurenotes.60

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statements1.22 AccrualsAccruals represent goods/services that have been received, but whereno invoice has been received from the supplier at the reporting date, orwhere an invoice has been received but final authorisation for paymenthas not been effected on the system.1.23 Related party transactionsRelated parties are departments that control or significantly influenceentities in making financial and operating decisions. Specific informationwith regards to related party transactions is included in the disclosurenotes.1.24 Contingent liabilitiesA contingent liability is a possible obligation that arises from past eventsand whose existence will be confirmed only by the occurrence or nonoccurrenceof one or more uncertain future events not wholly within thecontrol of the department; orA contingent liability is a present obligation that arises from past eventsbut is not recognised because:• It is not probable that an outflow of resources embodying economicbenefits or service potential will be required to settle theobligation; or• The amount of the obligation cannot be measured with sufficientreliability.Contingent liabilities are included in the disclosure notes.61

APPROPRIATION STATEMENT for the year ended 31 March 2008Appropriation Per Programme2007/08 2006/07ExpenditureAs % OfFinalAppropriationAdjusted ShiftingFinalActualFinalAppropriation Of Funds Virement Appropriation Expenditure VarianceAppropriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000ActualExpenditure1. Programme 1AdministrationCurrent payment 19,254 (1,209) 18,045 17,902 143 99.20% 7,220 6,732Transfers and subsidies 23 2Payment for capital assets 1,369 (237) 1,132 743 389 65.6% 493 952. Programme 2Sustainable ResourceManagementCurrent payment 24,644 (3,810) 20,834 19,923 911 95.6% 13,008 12,942Transfers and subsidies 40,000 40,000 40,000 0 100.0% 12 4Payment for capital assets 781 781 604 177 77.3% 708 6053. Programme 3Finance ManagementReformsCurrent payment 17,236 (1,260) 15,976 15,141 835 94.8% 11,181 11,111Transfers and subsidies 1,500 1,500 1,500 0 100.0% 39 38Payment for capital assets 540 540 302 238 55.9% 821 7944. Programme 4Finance GovernanceCurrent payment 13,780 6,279 20,059 15,199 4,860 75.8% 8,577 7,559Transfers and subsidies 25 6Payment for capital assets 455 237 692 611 81 88.3% 2,487 2,257Subtotal 119,559 0 119,559 111,925 7,634 93.6% 44, 594 42,145Statutory AppropriationCurrent paymentTransfers and subsidiesPayment for capital assetsTOTAL 119,559 0 119,559 111,925 7,634 93.6% 44,594 42, 14562

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsAPPROPRIATION STATEMENT for the year ended 31 March 2008Appropriation Per Economic Classification2007/08 2006/07AdjustedAppropriationShiftingOf FundsVirementFinalAppropriationActualExpenditureVarianceExpenditureAs % Of FinalAppropriationFinalAppropriationActualExpenditureR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000Current paymentsCompensation of employees 41,164 (1,470) (2,420) 37,274 37,089 185 99.5% 19,682 18,676Goods and services 33,750 1,470 2,420 37,640 31,076 6,564 82.6% 20,304 19,668Interest and rent on landFinancial transactions inassets and liabilitiesTransfers and subsidiesProvinces and municipalities 1,500 1,500 1,500 0 100% 78 14Departmental agencies andaccounts40,000 40,000 40,000 0 100%Universities and technikonsForeign governments andinternational organisationsPublic corporations andprivate enterprisesNon-profit institutionsHouseholds 21 36Payments for capital assetsBuildings and other fixedstructuresMachinery and equipment 3,145 3,145 2,260 885 71.9% 4,509 3,751Biological or cultivated assetsSoftware and other intangibleassetsLand and subsoil assetsTotal 119,559 0 0 119,559 111,925 7,634 93.6% 44,594 42,14563

APPROPRIATION STATEMENT for the year ended 31 March 20081. AdministrationAdjustedAppropriation2007/08 2006/07ShiftingOf FundsVirementFinalAppropriationActualExpenditureVarianceExpenditureAs % OfFinalAppropriationFinalAppropriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000ActualExpenditure1.1 Management ServicesCurrent payment 3,703 380 4,083 4,067 16 99.6% 1,646 2,470Transfers and subsidies 8 2Payment for capital 161 (47) 114 19 95 16.7% 63 62assets1.2 Corporate ServicesCurrent payment 3,741 1,457 (100) 5,098 5,075 23 99.5% 3,558 2,599Transfers and subsidiesPayment for capital 585 (190) 395 350 45 88.6% 0 0assets1.3 Office of the ChiefFinancial OfficerCurrent payment 3,621 1,740 5,361 5,357 4 99.9% 0 0Transfers and subsidiesPayment for capital assets 281 281 249 32 88.6% 0 01.4 Public and PrivatePartnershipCurrent payment 8,189 (3,577) (1,109) 3,503 3,403 100 97.1% 2,016 1,663Transfers and subsidies 15 0Payment for capitalassets342 342 125 217 36.5% 430 33Total 20,623 0 (1,446) 19,177 18,645 532 97.2% 7,736 6,82964

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsStatutory Appropriation Per Economic Classification2008/07 2006/07AdjustedAppropriationShifting ofFundsVirementFinalAppropriationActualExpenditureVarianceExpenditureas % of finalappropriationFinalAppropriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000Current paymentCompensation of employees 11,256 (1,380) (909) 8,967 8,883 84 99.1% 3,463 2,976Goods and services 7,998 1,380 (300) 9,078 9,019 59 99.4% 3,757 3,756Interest and rent on landFinancial transactions inassets and liabilitiesTransfers and subsidiesProvinces and municipalities 23 2Departmental agencies andaccountsUniversities and technikonsForeign governments andinternational organisationsPublic corporations andprivate enterprisesNon-profit institutionsHouseholdsPayments for capital assetsBuildings and other fixedstructuresMachinery and equipment 1,369 (237) 1,132 743 389 65.6% 493 95Biological or cultivated assetsSoftware and other intangibleassetsLand and subsoil assetsTotal 20,623 0 (1,446) 19,177 18,645 532 97.2% 7,736 6,829Actualexpenditure65

APPROPRIATION STATEMENT for the year ended 31 March 20082. Sustainable Resource Management2.1 Programme SupportAdjustedAppropriation2007/08 2006/07Shifting ofFundsVirementFinalAppropriationActualExpenditureVarianceExpenditureas % offinalappropriationFinalAppropriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000Current payment 1,237 1,200 (300) 2,137 2,099 38 98.2% 936 1,227Transfers and subsidies 0 1Payment for capital assets 70 (7) 63 23 40 36.5% 20 02.2 Budget ManagementCurrent payment 9,248 (2,500) (400) 6,348 5,535 813 87.2% 3,739 4,871Transfers and subsidies 0 2Payment for capital assets 120 120 11 109 9.2% 105 1532.3 Fiscal Policy andEconomic AnalysisCurrent payment 6,156 0 (2,210) 3,946 3,936 10 99.7% 3,785 2,970Transfers and subsidies 12 0Payment for capital assets 153 153 125 28 81.7% 150 1252.4 Public FinanceCurrent payment 8,003 1,300 (900) 8,403 8,353 50 99.4% 4,548 3,874Transfers and subsidies 0 1Payment for capital assets 438 7 445 445 100.0% 433 3272..5 Gauteng Fund ProjectOfficeCurrent paymentTransfers and subsidies 40,000 40,000 40,000 100.0%Payment for capital assetsActualExpenditureTotal 65,425 0 (3,810) 61,615 60,527 1,088 98.2% 13,728 13,55166

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsStatutory Appropriation Per Economic Classification2007/08 2006/07AdjustedAppropriationShifting ofFundsVirementFinalAppropriationActualExpenditureVarianceExpenditureas % of finalappropriationFinalAppropriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000Current paymentCompensation of employees 14,594 (1,150) 13,444 13,381 63 99.5% 6,682 6,618Goods and services 10,050 (2,660) 7,390 6,542 848 88.5% 6,326 6,324Interest and rent on landFinancial transactions inassets and liabilitiesTransfers and subsidiesProvinces and municipalities 12 4Departmental agencies andaccounts40,000 40,000 40,000 100.0%Universities and technikonsForeign governments andinternational organisationsPublic corporations andprivate enterprisesMachinery & equipment 781 781 604 177 77.3% 708 605HouseholdsActualexpenditureTotal 65,425 (3,810) 61,615 60,527 1,088 98.2% 13,728 13,55167

APPROPRIATION STATEMENT for the year ended 31 March 20083. Finance Management Reforms3.1 Programme SupportAdjustedAppropriationShifting ofFundsVirementFinalAppropriation2007/08 2006/07ActualExpenditureVarianceExpenditureas % offinalappropriationFinalAppropriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000Current payment 1,435 (100) (470) 865 856 9 99.0% 2,723 2,453Transfers and subsidies 2 1Payment for capital assets 540 (137) 403 204 199 50.6% 399 3993.2 Norms and StandardsCurrent payment 3,357 (900) 2,457 2,448 9 99.6% 1,308 1,217Transfers and subsidies 5Payment for capital assets 44 44 5 39 11.4% 422 3273.3 Municipal BudgetManagementCurrent payment 7,357 2,525 9,882 9,083 799 91.9% 7,150 7,441Transfers and subsidies 1,500 1,500 1,500 0 100.0% 32 37Payment for capital assets 0 683.4 Municipal AccountingCurrent payment 5,087 (1,525) (790) 2,772 2,754 18 99.4%Transfers and subsidiesPayment for capital assets 93 93 93 0 100.0%3.5 Support and InterlinkedFinancial ServicesCurrent paymentTransfers and subsidiesPayment for capital assetsActualExpenditureTotal 19,276 0 (1,260) 18,016 16,943 1,073 94.0% 12,041 11,94368

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsStatutory Appropriation Per Economic Classification2007/08 2006/07AdjustedAppropriationShifting ofFundsVirementFinalAppropriationActualExpenditureVarianceExpenditureas % of finalappropriationFinalAppropriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000Current paymentCompensation of employees 8,207 (970) 7,237 7,225 12 99.8% 4,671 4,669Goods and services 9,029 (290) 8,739 7,916 823 90.6% 6,510 6,442Interest and rent on landFinancial transactions inassets and liabilitiesTransfers and subsidiesProvinces and municipalities 1,500 1,500 1,500 100.0% 18 2Departmental agencies andaccountsUniversities and technikonsForeign governments andinternational organisationsPublic corporations andprivate enterprisesNon-profit institutionsHouseholds 21 36Payments for capital assetsBuildings and other fixedstructuresMachinery and equipment 540 540 302 238 55.9% 821 794Biological or cultivated assetsSoftware and other intangibleassetsLand and subsoil assetsActualexpenditureTotal 19,276 (1,260) 18,016 16,943 1,073 94.0% 12,041 11,94369

APPROPRIATION STATEMENT for the year ended 31 March 20084. Financial GovernanceAdjustedAppropriation2007/08 2006/07Shifting ofFundsVirementFinalAppropriationActualExpenditureVarianceExpenditureas % offinalappropriationFinalAppropriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’0004.1 Programme SupportCurrent payment 2,710 (1,100) 1,610 1,567 43 97.3% 4,236 3,256Transfers and subsidies 3 1Payment for capital assets 409 47 456 411 45 90.1% 2,153 1,8264.2 Assets and liabilitiesManagementCurrent payment 5,255 (2,575) 2,680 2,628 52 98.1% 1,394 2,039Transfers and subsidies 8 1Payment for capital assets 13 190 203 200 3 98.5% 249 3504.3 Accounting ServicesCurrent payment 1,133 5,730 6,279 13,142 8,382 4,760 63.8% 2,947 2,264Transfers and subsidies 14 4Payment for capital assets 19 19 0 19 0.0% 85 814.4 Risk ManagementCurrent payment 4,682 (2,055) 2,627 2,622 5 99.8%Transfers and subsidiesPayment for capital assets 14 14 0 14 0.0%Total 14,235 0 6,516 20,751 15,810 4,941 76.2% 11,089 9,822ActualExpenditure70

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsStatutory Appropriation Per Economic Classification2007/08 2006/07AdjustedAppropriationShifting ofFundsVirementFinalAppropriationActualExpenditureVarianceExpenditureas % of finalappropriationFinalAppropriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000Current paymentCompensation of employees 7,107 (90) 609 7,626 7,600 26 99.7% 4,866 4,413Goods and services 6,673 90 5,670 12,433 7,599 4,834 61.1% 3,711 3,146Interest and rent on landFinancial transactions inassets and liabilitiesTransfers and subsidiesProvinces and municipalities 25 6Departmental agencies andaccountsUniversities and technikonsForeign governments andinternational organisationsPublic corporations andprivate enterprisesNon-profit institutionsHouseholdsPayments for capital assetsBuildings and other fixedstructuresMachinery and equipment 455 0 237 692 611 81 88.3% 2,487 2,257Biological or cultivated assetsSoftware and other intangibleassetsLand and subsoil assetsTotal 14,235 0 6,516 20,751 15,810 4,941 76.2% 11,089 9,822Actualexpenditure71

NOTES TO THE APPROPRIATION STATEMENT for the year ended 31 March 20081.Explanations of material variances from Amounts Voted (after Virement):1.1 Per Programme Final AppropriationR’000Actual ExpenditureR’000VarianceR’000Variance As A % Of FinalAppropriationAdministration 19,177 18,645 532 2.8%Sustainable Resource Management 61,615 60,527 1,088 1.8%Financial Management Reforms 18,016 16,943 1,073 6.0%Financial Governance 20,751 15,810 4,941 23.8%• The variance of 2.8% under Administration is relates to funds budgeted for capital expenditure that were not utilised due to unfilled vacancies.• The variance of 6.0% under Financial Management Reforms relates to funds budgeted for operating manuals for municipalities of whichpayments were not effected at year-end.• The variance of 23.8% under Financial Governance relates to funds budgeted for the asset valuation project for the province of which paymentswere not effected at year-end.1.2 Per Economic Classification Final AppropriationR’000Actual ExpenditureR’000VarianceR’000Variance As A % Of FinalAppropriationCompensation Of Employees 37,274 37,089 185 0.5%Goods And Services 37,640 31,076 6,564 17.4%Payments For Capital Assets 3,145 2,260 885 28.1%Transfers And Subsidies 41,500 41,500 0 0• Payments for capital assets: The 28.1 % under spending on machinery and equipment represents the capital budget associated with newvacancies that were not filled in the year.• Goods and services: The under spending by 17.4% on goods and services represents unutilised funds relating to the asset valuation projectof the province as well as the operating manuals for municipalities.72

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsStatement of Financial Performance for the year ended 31 March 2008Note 2007/08 2006/07R’000 R’000Revenue 445,613 272,293Annual Appropriation 1. 119,559 44,594Departmental Revenue 2. 326,054 227,699ExpenditureCurrent Expenditure 68,165 38,344Compensation Of Employees 3. 37,089 18,676Goods And Services 4. 31,076 19,668Transfers And Subsidies 5. 41,500 50Expenditure For Capital Assets 2,260 3,751Machinery And Equipment 6. 2,260 3,751Total Expenditure For Capital AssetsTotal Expenditure 111,925 42,145Surplus/(DEficit) 333,688 230,148Surplus/(Deficit) For The Year 333,688 230,148Reconciliation Of Surplus/(Deficit) For The YearVoted Funds 9 7,634 2,449Departmental Revenue 10 326,054 227,699Surplus For The Year 333,688 230,14873

STATEMENT OF FINANCIAL POSITIONas at 31 March 2008Note 2007/08 2006/07R’000 R’000AssetsCurrent Assets 11,416 19,838Cash And Cash Equivalents 13 7,859 19,542Receivables 8 3,557 296Non-Current AssetsTotal Assets 11,416 19,838LiabilitiesCurrent Liabilities 11,416 19,838Voted Funds To Be Surrendered To The Revenue Fund 9 7,634 2,449Departmental Revenue To Be Surrendered To Revenue Fund 10 3,775Payables 7 17,389Non-Current LiabilitiesTotal Liabilities 11,416 19,83874

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsCASHFLOW STATEMENTfor the year ended 31 March 2008Note 2007/08 2006/07R’000 R’000Cash Flows From Operating ActivitiesReceipts 445,613 272,293Annual Appropriated Funds Received 1 119,559 44,594Departmental Revenue Received 2 326,054 227,699Net (Increase)/Decrease In Working Capital (20,643) 17,093Surrendered To Revenue Fund (324,728) (227,699)Current Payments (68,165) (38,344)Transfers And Subsidies Paid (41,500) (50)Net Cash Flow Available From Operating Activities 12 (9,423) 23,293Cash Flows From Investing ActivitIesPayments For Capital Assets (2,260) (3,751)Net Cash Flows From Investing Activities (2,260) (3,751)Cash Flows From Financing Activities 0 0Net Cash Flows From Financing Activities 0 0Net Increase/(Decrease) In Cash And Cash Equivalents (11,683) 19,542Cash And Cash Equivalents At The Beginning Of The Period 19 542 -Cash And Cash Equivalents At End Of Period 7 7,859 19,54275

Notes to the Annual Financial Statement for the year ended 31 March 20081. Annual AppropriationAnnual Appropriation2007/8 2006/07FinalAppropriationActual FundsReceivedFunds notrequested/not receivedAppropriationreceivedProgrammes R’000 R’000 R’000 R’000Administration 19,177 20,623 0 8,009Sustainable Resource Management 61,615 65,425 0 13,665Financial Management Reforms 18,016 19,276 0 11,830Financial Governance 20,751 14,235 0 11,090Total 119,559 119,559 0 44,5942. Departmental revenue to be surrendered to revenue fundNote 2007/08 2006/07Sales of goods and services other than capital assets 2.1 30 10Interest, dividends and rent on land 2.2 326,024 227,689Total revenue collected 326,054 227,699Departmental revenue collected 326,054 227,69976

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statements2.1 Sales of goods and services other than capital assets2007/08 2006/07Sales of goods and services produced by the department 30 10Other sales 30 10Sales of scrap, waste and other used current goodsTotal 30 102.2 Interest, dividends and rent on land and buildings2007/08 2006/07Interest 326,024 227,689Total 326,024 227,6893. Compensation of employeesSalaries and Wages2007/08 2006/07Basic salary 24,345 12,007Performance award 403 299Service Based 1,406 18Compensative/circumstantial 1,084 360Periodic payments 628 69Other non-pensionable allowances 5,326 4,039Total 33,192 16,79277

Social contributions2007/08 2006/07Employer contributionsPension 3,086 1,551Medical 808 331Bargaining council 3 2Total 3,897 1,884Total compensation of employees 37,089 18,676Average number of employees 138 1034. Goods and servicesNote 2007/08R’0002006/07R’000Advertising 1,577 1,232Attendance fees (including registration fees) 43 84Bank charges and card fees 1,710 1,302Bursaries (employees) 646 143Catering 458 0Communication 2,382 382Computer services 4 19Consultants, contractors and special services 7,563 9,429Courier and delivery services 3 5Entertainment 89 350External audit fees 4.1 1,380 417Equipment less than R5000 425 113Inventory 4.2 151 1,966Maintenance, repairs and running costs 3,886 1,31678

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsNote 2007/08R’0002006/07R’000Operating leases 354 131Personnel Agency fees 95Photographic services 2Plant flowers and other decorations 5Printing and publications 3,135Professional bodies and membership fees 7Resettlement costs 101 95Subscriptions 365 90Translations and transcriptions 120 17Travel and subsistence 4.3 4,057 1,474Venues and facilities 993 650Protective, special clothing & uniforms 3Training & staff development 1,522 453Total 31,076 19,668External audit fees2007/08 2006/07Regulatory audits 1,380 417Total 1,380 417Inventory2007/08 2006/07Domestic consumables 22 71Food and Food supplies 81 46Parts and other maintenance material 48 2Stationery and printing 1,847Total 151 1,96679

Travel and subsistence2007/08R’0002006/07R’000Local 1,716 592Foreign 2,341 882Total 4,057 1,4745. Transfers and subsidies2007/08R’0002006/07R’000NoteProvinces and municipalities Annex 1C 1,500 14Departmental agencies and accounts Annex 1G 40,000Households Annex 1L 0 36Total 41,500 506. Expenditure for capital assets2007/08R’0002006/07R’000Machinery and equipment 2,260 3,751Total 2,260 3,7517. Cash and cash equivalents2007/08R’0002006/07R’000Consolidated Paymaster General Account 7,859 19,537Cash on hand 5Total 7,859 19,54280

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statements8. Receivables2007/08 2006/07Less than oneyearOne to threeyearsOlder than threeyearsTotalTotalStaff debtors 296Other Debtors 43 43Intergovernmental Receivables 3,514 3,514Total 3,557 3,557 296Staff Debtors2007/08R’0002006/07R’000Claims Recovery: Pension Recoverable 2Deduction Control: income Tax 294Salary tax Debt 5T&S Advance 7Salary Recovery 4Bursary and ex-staff 27Total 43 2969. Voted funds to be surrendered to the Revenue Fund2007/08 2006/07Opening balance 2,449Transfer from Statement of Financial Performance 7,634 2,449Voted funds not requested/not received -Paid during the year (2,449)Closing balance 7,634 2,44981

10. Departmental revenue to be surrendered to the Revenue Fund2007/08 2006/07Opening balanceTransfer from Statement of Financial Performance 326,054 227,699Paid during the year (322,279) (227,699)Closing balance 3,775 011. Payables – current2007/08 2006/07Description Notes 30 Days 30+ Days Total TotalAmounts owing to other entities 0 0 17,359Clearing accounts 11.1 7 7 15Other payables 11.2 0 0 15Total 7 7 17,389Clearing accounts2007/08 2006/07Salary: ACB 0 9Salary: Pension Fund 0 6Debt receipt control 7 0Total 7 15Other payables2007/08 2006/07Debt Account 0 9Debt Receivable Income 0 6Claims against the department 0 0Total 0 1582

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statements12. Net cash flow available from operating activities2007/08R’0002006/07R’000Net surplus/(deficit) as per Statement of Financial Performance 333,688 230,148Add back non cash/cash movements not deemed operating activities (343,111) (206,855)(Increase)/decrease in receivables – current (3,261) (296)Increase/(decrease) in payables – current (17,382) 17,389Expenditure on capital assets 2,260 3,751Surrenders to Revenue Fund (324,728) (227,699)Net cash flow generated by operating activities (9,423) 23,29313. Reconciliation of cash and cash equivalents for cash flow purposes2007/08 2006/07Consolidated Paymaster General account 7,859 19,537Cash on hand 5Total 7,859 19,54283

DISCLOSURE NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 20081. Commitments2007/08 2006/07Approved and contracted 14,121 4,469Total 14,121 4,4692. Accruals2007/08 2006/07Listed by economic classification 30 Days 30+ Days Total TotalCompensation of employeesGoods and services 6;066 6,066Interest and rent on landTransfers and subsidiesMachinery and equipmentTotal 6,066 6,06684

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statements3. Contingent liabilitiesNote 2007/08 2006/07Liable toNatureHousing loan guarantees Employees Annex 3A 18 28Other Annex 3B 0 3,600Total 18 3,6284. Employee benefits2007/08 2006/07Leave entitlement 2,268 1,537Thirteenth cheque 874 555Performance awards 796 270Capped leave commitments 789 405Total 4,727 2,7675. Operating leases2007/2008 LandBuildings and otherfixed structuresMachinery andequipmentTotalNot later than 1 year 174 63 237Later than 1 year and not later than 5 yearsLater than five yearsTotal present value of lease liabilities 174 63 23785

2006/2007 LandBuildings and otherfixed structuresMachinery andequipmentTotalNot later than 1 year 133 133Later than 1 year and not later than 5 yearsLater than five yearsTotal present value of lease liabilities 133 1336. Revenue received/(paid)2007/08R’000Sales of goods and services other than capital assets 30 102006/07R’000Interest, dividends and rent on land 326,024 227,689Total 326,054 227,6997. Key management personnelNo. of Individuals 2007/08 2006/07Level 15 to 16 3 2,375 745Level 14 6 1,890 1,589Total 4,265 2,334• Two of the staff members at level 15-16 were promoted from level 14 three months before the end of the financial year.• Three of the level 14 management personnel were promoted one month before the end of the financial year.86

GAUTENG TREASURY ANNUAL REPORT • Annual Financial Statements8. Tangible Capital AssetsMOVEMENT IN TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2008Opening balanceCurrent YearAdjustments to prioryear balancesAdditions Disposals Closing BalanceCost Cost Cost Cost CostR’000 R’000 R’000 R’000 R’000MACHINERY AND EQUIPMENTComputer equipment 1,134 51 1,474 2,659Furniture and office equipment 2,599 364 497 3,460Other machinery and equipment 18 5 289 312TOTAL TANGIBLE ASSETS 3,751 420 2,260 6,431ADDITIONS TO TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2008Cash Non-cash (Capital Work inProgress current costs)Received current, notpaid(Paid current year,received prior year)TotalCost Fair Value Cost Cost CostR’000 R’000 R’000 R’000 R’000MACHINERY AND EQUIPMENTComputer equipment 1,474 1,474Furniture and office equipment 497 497Other machinery and equipment 289 289TOTAL 2,260 2,26087

MOVEMENT IN TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31MARCH 2007Opening balance Additions Disposals Closing balanceR’000 R’000 R’000 R’000MACHINERY AND EQUIPMENTComputer equipment 1,134 1,134Furniture and office equipment 2,599 2,599Other machinery and equipment 18 18TOTAL TANGIBLE ASSETS 3,751 3,75188

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsANNEXURES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2008ANNEXURE 1CSTATEMENT OF CONDITIONAL GRANTS PAID TO PROVINCESNAME OFPROVINCE/GRANTGRANT ALLOCATION TRANSFER SPENT 2006/07DivisionofRevenueActRollOversAdjustmentsTotalAvailableActualTransfer% ofAvailablefundsTransferredAmountreceivedbydepartmentAmountspent bydepartment% ofavailable fundsspent bydepartmentDivisionofRevenueActR’000 R’000 R’000 R’000 R’000 % R’000 R’000 % R’000Regional Service Council Levy 1414ANNEXURE 1ESTATEMENT OF CONDITIONAL GRANTS PAID TO MUNICIPALITIESGRANT ALLOCATION TRANSFER SPENT 2006/07NAME OFMUNICIPALITYDivisionofRevenueActRollOversAdjustmentsTotalAvailableActualTransfer% ofAvailablefundsTransferredAmountreceivedbymunicipalityAmountspent bymunicipality% ofavailablefundsspent bymunicipalityDivisionofRevenueActR’000 R’000 R’000 R’000 R’000 % R’000 R’000 % R’000Nokeng tsa Taemane 1,500 1,500 1,500 100% 1,500 108 7.21,500 1,500 1,500 100% 1,500 108 7.289

ANNEXURE 1GSTATEMENT OF TRANSFERS TO DEPARTMENTAL AGENCIES AND ACCOUNTSHOUSEHOLDSTRANSFER ALLOCATION EXPENDITURE 2006/07AdjustedAppropriationActRollOversAdjustmentsTotalAvailableActualTransfer% ofAvailable fundsTransferredAppropriationActR’000 R’000 R’000 R’000 R’000 % R’000DEPARTMENTS / AGENCY/ ACCOUNTGauteng Project Office 40,000 40,000 40,000 100% 0Total 40,000 40,000 40,000 100% 0ANNEXURE 1LSTATEMENT OF TRANSFERS TO HOUSEHOLDSHOUSEHOLDSTRANSFER ALLOCATION EXPENDITURE 2006/07AdjustedAppropriationActRollOversAdjustmentsTotalAvailableActualTransfer% ofAvailable fundsTransferredAppropriationActR’000 R’000 R’000 R’000 R’000 % R’000SOCIAL BENEFIT(HOUSING) 0 0.0% 360 0.0% 36Total 3690

GAUTENG TREASURY ANNUAL REPORT • Annual Financial StatementsANNEXURE 3ASTATEMENT OF FINANCIAL GUARANTEES ISSUED AS AT 31 MARCH 2008 – LOCALGuarantorinstitutionGuaranteeinrespect ofOriginalguaranteedcapitalamountOpeningbalance1 April 2007Guaranteesdrawdownsduring theyearGuaranteesrepayments/cancelled/reduced/releasedduring theyearCurrencyrevaluationsClosingbalance31 March2008Guaranteedinterest foryear ended31 March2008Realisedlosses notrecoverableR’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000Housing 28 18 28 18Total 28 18 28 18STATEMENT OF FINANCIAL GUARANTEES ISSUED AS AT 31 MARCH 2007 - LOCALGuarantorinstitutionGuaranteeinrespect ofOriginalguaranteedcapitalamountOpeningbalance1 April 2006Guaranteesdrawdownsduring theyearGuaranteesrepayments/cancelled/reduced/releasedduring theyearCurrencyrevaluationsClosingbalance31 March2008Guaranteedinterest foryear ended31 March2008Realisedlosses notrecoverableR’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000Housing 118 89 28Total 118 89 28ANNEXURE 3BSTATEMENT OF CONTINGENT LIABILITIES AS AT 31 MARCH 2008Nature of LiabilityOpeningBalance01/04/2007Liabilities incurredduring the yearLiabilities paid/cancelled/reducedduring the yearLiabilitiesrecoverable(Providedetails hereunder)ClosingBalance31/03/2008R’000 R’000 R’000 R’000 R’000Other 3,600 81 3,681 0Total 3,600 81 3,681 091

STATEMENT OF CONTINGENT LIABILITIES AS AT 31 MARCH 2007Nature of LiabilityOpeningBalance01/04/2006Liabilities incurredduring the yearLiabilities paid/cancelled/reducedduring the yearLiabilitiesrecoverable(Providedetails hereunder)ClosingBalance31/03/2007R’000 R’000 R’000 R’000 R’000Other 3,600 3,600Total 3,600 3,600ANNEXURE 4INTER-GOVERNMENTAL RECEIVABLESGOVERNMENT ENTITY Confirmed balance outstanding Unconfirmed balance outstanding TOTAL31/03/2008 31/03/2007 31/03/2008 31/03/2007 31/03/2008 31/03/2007R’000 R’000 R’000 R’000 R’000 R’000DEPARTMENTSCurrentDepartment of EconomicDevelopment3,242 3,242GSSC 250 250National Treasury 22 22Total 3,514 3,51492

Oversight ReportOversight Report

GAUTENG TREASURY ANNUAL REPORT • Oversight ReportSECTION VOversight Report95

1. Service deliveryAll departments are required to develop a Service Delivery Improvement (SDI) Plan. The following tables reflect the components of the SDI plan as wellas progress made in the implementation of the plans.1.1 Main Services Provided And StandardsMain Services Actual Customers PotentialCustomersStandard Of ServiceActual Achievement Against StandardsFinancialReporting.Departments,municipalities,Gauteng Legislatureand NationalTreasury.The citizens ofGauteng.On a quarterly basis, supplycurrent financial informationas per budget allocation to allprovincial departments andlocal/district authorities.Consolidated municipal budget statements were publishedthrough a Gazette on a quarterly basis. These were submittedto the Gauteng Legislature within 45 days after the end ofeach quarter.The provincial quarterly receipt and payments were submittedto National Treasury for publishing in the GovernmentGazette at the end of each quarter in terms of section 32 ofthe Public Finance Management Act, 1999.On a monthly basis, issueconsolidated reports onexpenditure trends ofprovincial departments andpublic entities.Provincial consolidated financial reports were compiledmonthly for distribution to National Treasury and quarterly forsubmission to the Gauteng Provincial Legislature.Tabling of budgets. GPG Departments. The citizens ofGauteng.Table the provincial mainand adjustments budgetin February and Novemberannually.The Gauteng Provincial Government Adjustment BudgetStatements for 2007/08 was tabled in November 2007 andMarch 2008. The Budget Statement for the 2008 MediumTerm Expenditure Framework was tabledProvision ofsupport andassistance.GautengMunicipalities.N/AProvide timely information andassistance to municipalities toassist them in their planningand budgeting processes bySeptember each year.Compilation and distribution of an Annual Municipal FinanceManagement Act (MFMA) Circular, which includes mappingout the budgeting process and provision of guidelines onpolicy consideration, was successfully and timeously done.GPG Departmentsand Municipalities.N/ARespond to requests forfinancial information andassistance within 48 hours ofreceipt thereof.All requests for financial information and assistance wereresponded to within 48 hours.GPG Departments. N/A Respond to requests foreconomic and financial policysupport within 24 hours.All requests for economic and financial policy support wereresponded to within 24 hours after receipt.96

GAUTENG TREASURY ANNUAL REPORT • Oversight Report1.2 Consultation Arrangements With CustomersType Of Arrangement Actual Customers Potential Customers Actual AchievementsMedium Term ExpenditureCommittee (MTEC).GPG Departments and NationalTreasury.N/AMTEC hearings took place in respect of the 2008/09 budget.Premier’s Budget Council (PBC).Premier, MECs and HoDs ofGPG departments.N/APBC meetings took place in the 2007/08 financial year.Facilitation of National Treasury visitto GPG.National Treasury and GPGDepartments.N/ANational Treasury visits took place in 2007/08 financial year.1.3 Service Delivery Access StrategyAccess StrategySharing budgeting and other financial information with the public and otherstakeholders.Actual AchievementsExhibition at the Rand Show, information kiosk at the Gauteng Legislature,Budget Speech February 2008.Publication of the GPG Budget statement for 2008/09. Budget Statement published in February 2008.1.4 Service Information ToolTypes Of Information ToolGauteng Treasury website (www.treasury.gpg.gov.za).Information Brochure for Gauteng Treasury.Actual AchievementsDevelopment and establishment of the website.Development and publishing of Information Brochure.1.5 Complaints MechanismComplaints MechanismCentral complaints point in the Office of the Head of Department(communicated in the Treasury Service Charter.Actual AchievementsNo formal complaints were received through this mechanism.97

2. ExpenditureDepartments budget in terms of clearly defined programmes. The following tables summarise final audited expenditure by programme and by salarybands. In particular, it provides an indication of the amount spent on personnel costs in terms of each of the programmes or salary bands within thedepartment.2.1 Personnel Costs By Programme, 2007/2008ProgrammeTotal Expenditure(R’000)PersonnelExpenditure (R’000)Training Expenditure(R’000)Personnel Cost AsA Percent Of TotalExpenditureAverage PersonnelCost Per Employee(R’000)Administration 9,198 8,884 305 24 21Sustainable ResourceManagementFinancial ManagementReforms13,879 13,381 498 36 277,664 7,225 439 20 25Financial governance 7,879 7,599 280 20 252.2 Personnel Costs By Salary Bands, 2007/2008Salary BandsPersonnel Expenditure(R’000)% Of Total Personnel Cost Average Personnel Cost Per Employee(R’000)Lower skilled (levels 1-2) 52 0.1 26Skilled (levels 3-5) 436 1.2 73Highly Skilled (level 6-8) 2,931 7.8 133Highly Skilled (level 9-12) 18,213 48.5 289Senior Management 13,127 35 571Contract ( Level 3-5 ) 48 0.1 48Contract ( Level 6-8 ) 59 0.2 59Contract ( Level 9-12 ) 1,247 3.3 416Periodic Payments 271 0.7 8Abnormal Appointments 927 2.5 3698

GAUTENG TREASURY ANNUAL REPORT • Oversight ReportThe following tables provide a summary per programme and salary bands of expenditure incurred as a result of salaries, overtime, home owners allowanceand medical assistance. In each case, the table provides an indication of the percentage of the personnel budget that was used for theseitems.2.3 Salaries, Overtime, Home Owners Allowance And Medical Assistance By Programme, 2007/2008Programme Salaries Overtime Home Owners Allowance Medical AssistanceAmount(R’000)Salariesas a % ofpersonnelcostAmount(R’000)Overtimeas a % ofpersonnelcostAmount(R’000)HOA as a %of personnelcostAmount(R’000)MedicalAssistanceas a % ofpersonnelcostAdministration 5,535 62 0 0 263 3 220 3Sustainable ResourceManagementFinancialManagement Reform9.046 68 0 0 119 0.89 272 25,088 70 0 0 65 0.90 112 1.5Financial Reforms 4,675 62 0 0 174 2 204 2.699

2.4 Salaries, Overtime, Home Owners Allowance and Medical Assistance by salary bands, 2007/2008Salary Bands Salaries Overtime Home Owners Allowance Medical AssistanceAmount(R’000)Salariesas a % ofpersonnelcostAmount(R’000)Overtimeas a % ofpersonnelcostAmount(R’000)HOA as a %of personnelcostAmount(R’000)MedicalAssistanceas a % ofpersonnelcostLower skilled ( Level1-2 )46 88.5 0 0 0 0 0 0Skilled ( Level 3-5 ) 299 68.5 0 0 5 1.1 38 8.7Highly Skilledproduction ( Level6-8 )Highly Skilledsupervision Level( 9-8)2,220 75.6 0 0 57 1.9 172 5.913,245 72.1 0 0 180 1 374 2Senior Management 7,572 57.3 0 0 378 2.9 185 1.4Contract 3-5 29 60.4 0 0 0 0 0 0Contract 6-8 40 67.8 0 0 0 0 0 0Contract 9-12 938 75.2 0 0 0 0 0 0100

GAUTENG TREASURY ANNUAL REPORT • Oversight Report3. Employment and VacanciesThe following tables summarise the number of posts on the establishment, the number of employees, the vacancy rate, and whether there are anystaff that are additional to the establishment. This information is presented in terms of three key variables: - programme, salary band and critical occupations.The vacancy rate reflects the percentage of posts that are not filled.3.1 Employment And Vacancies By Programme, 31 March 2008Programme Number of posts Number of posts filled Vacancy Rate Number of posts filledadditional to theestablishment1: Administration 42 39 7.1% 02: Sustainable Resource Management 57 33 42.1% 03: Financial Reforms 30 20 33.3% 04: Financial Governance 38 29 23.6% 0Total 167 121 27.5% 03.2 Employment And Vacancies By Salary Bands, 31 March 2008Salary band Number of posts Number of posts filled Vacancy Rate Number of posts filledadditional to theestablishmentLower Skilled (Levels 1 – 2) Permanent 2 2 0 0Skilled (Levels 3 – 5) Permanent 7 7 0 0Highly Skilled Production (Levels 6 – 8) Permanent 25 22 12% 0Highly Skilled Supervision (Levels 9 – 12)Permanent91 63 30.8% 0Senior Management (Levels 13 – 16) Permanent 39 24 38.5% 0Contract (Levels 9 – 12) 3 3 0 0Total 167 121 27.5% 0101

3.3 Employment And Vacancies By Critical Occupation, 31 March 2008Critical occupations Number of posts Number of postsfilledVacancy RateNumber ofposts filledadditional to theestablishmentAdministrative related, Permanent 2 1 50% 0Communication and Information related, Permanent 2 2 0 0Economists, Permanent 9 0 100% 0Finance and Economics related, Permanent 64 50 21.9% 0Financial and related professionals, Permanent 23 19 17.4% 0Financial clerks and credit controllers, Permanent 1 1 0 0Food service aids and waiters, Permanent 2 2 0 0Head of Department/Chief Executive Officer, Permanent 2 1 50% 0Human Resource & Organisation Development and related, Permanent 3 3 0 0Human Resource related, permanent 8 7 12.5% 0Information technology related, permanent 1 0 100% 0Library, mail and related clerks, permanent 1 1 0 0Messengers, porters and deliverers, permanent 2 2 0 0Other information technology personnel, permanent 1 0 100% 0Secretaries and other keyboard operating clerks, permanent 9 9 0 0Senior Managers, permanent 37 23 37.8% 0Total 167 121 27.5%102

GAUTENG TREASURY ANNUAL REPORT • Oversight Report4. Job EvaluationThe Public Service Regulations, 1999 introduced job evaluation as a way of ensuring that work of equal value is remunerated equally. Within a nationallydetermined framework, executing authorities may evaluate or re-evaluate any job in his or her organisation. In terms of the Regulations allvacancies on salary levels 9 and higher must be evaluated before they are filled. This was complemented by a decision by the Minister for the PublicService and Administration that all SMS jobs must be evaluated before 31 December 2002.The following table summarises the number of jobs that were evaluated during the year under review. The table also provides statistics on the numberof posts that were upgraded or downgraded.4.1 Job Evaluation, 2007/2008Salary bandNumber ofpostsNumberof JobsEvaluated% of postsevaluated bysalary bandsPosts UpgradedNumber% of postsevaluatedPosts downgradedNumber% of postsevaluatedLower Skilled (Levels 1 – 2) 2 2 100% 0 0 0 0Skilled (Levels 3 – 5) 7 7 100% 2 28.5% 0 0Highly skilled production (Levels6 – 8)Highly skilled supervision (Levels9 – 12)25 25 100% 2 8% 0 094 90 95.7% 18 20% 0 0SMS Band A 22 22 100% 0 0 0 0SMS Band B 13 13 100% 0 0 0 0SMS Band C 2 2 100% 0 0 0 0SMS Band D 2 1 50% 0 0 0 0Total 167 162 97% 22 13.5% 0 0103

The following table provides a summary of the number of employees whose salary positions were upgraded due to their posts being upgraded. Thenumber of employees might differ from the number of posts upgraded since not all employees are automatically absorbed into the new posts andsome of the posts upgraded could also be vacant.4.2 Profile Of Employees Whose Salary Positions Were Upgraded Due To Their Posts Being Upgraded, 2007/2008Beneficiaries African Asian Coloured White TotalFemale 1 0 0 0 1Male 1 0 0 1 2Total 2 0 0 1 3Employees with a disability 0The following table summarises the number of cases where remuneration levels exceeded the grade determined by job evaluation. Reasons for thedeviation are provided in each case.Total Number of Employees whose salaries exceeded the grades determined by job evaluation in 2007/08None104

GAUTENG TREASURY ANNUAL REPORT • Oversight Report5. Employment ChangesThis 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 ratesby salary band and by critical occupations.5.1 (A) Annual Turnover Rates By Salary Band For The Period 2007/2008, Permanent PositionsSalary BandNumber ofemployees per bandas on 1 April 2007Appointments andtransfers into thedepartmentTerminations andtransfers out of thedepartmentTurnover rateLower skilled (Levels 1 – 2), Permanent 0 2 0 0Skilled (Levels 3 – 5), Permanent 3 6 1 11.1%Highly skilled productions (Levels 6 – 8), Permanent 18 2 3 15%Highly skilled supervision (Levels 9 – 12), Permanent 46 13 2 3.3%Senior Management Services, Band A, Permanent 16 1 1 5.8%Senior Management Services, Band B, Permanent 3 1 2 50%Senior Management Services, Band C, Permanent 1 0 0 0Senior Management Services, Band D, Permanent 1 0 0 0Total 88 25 9 7.9%5.1 (b) Annual turnover rates by salary band for the period 2007/2008, temporary positionsSalary BandNumber of employees perband as on 1 April 2007Appointments andtransfers into thedepartmentTerminations and transfersout of the departmentTurnover rateContract (Levels 3 -5) 0 1 1 100%Contract (Levels 6 – 8) 1 2 3 100%Contracts (Levels 9 – 12) 1 5 3 50%Total 2 8 7 70%105

5.1 (c) Total annual turnover rates by salary band for the period 2007/2008, contract positionsNumber of employees per band ason 1 April 2007Appointments and transfers intothe departmentTerminations and transfers out ofthe departmentTurnover rate90 33 16 13%5.2 (a) Annual turnover rates by critical occupation for the period 2007/2008, permanent positionsOccupation:Number ofemployees peroccupation ason 1 April 2007Appointmentsand transfersinto thedepartmentTerminationsand transfersout of thedepartmentTurnover rateAdministrative related, Permanent 4 0 1 25%Client inform clerks (switchboard/ reception/information clerks) 4 0 2 50%Economists, Permanent 1 0 0 0Electrical and electronics engineering technicians 1 0 0 0Finance and economics related, Permanent 41 3 0 0%Financial and related professionals, Permanent 11 5 2 12.5%Financial clerks and credit controllers, Permanent 4 0 0 0Food services aids and waiters, Permanent 0 2 0 0Head of Department/Chief Executive Officer, Permanent 0 1 0 0Human resource and organisational development and related, Permanent 3 1 0 0Human resource clerks, Permanent 2 0 1 50%Human resource related, Permanent 2 3 0 0Library mail and related clerks, Permanent 0 3 1 33%Messengers, Porters and Deliverers, Permanent 0 1 0 0Other administrative and related clerks and organizers 1 0 0 0Secretaries and other keyboard operating clerks, Permanent 4 4 1 12.5%Senior Managers, Permanent 9 2 1 9%Statisticians and related professionals, Permanent 1 0 0 0Total 88 25 9 7.9%106

GAUTENG TREASURY ANNUAL REPORT • Oversight Report5.2 (b) Annual turnover rates by critical occupation for the period 2007/2008, contract positionsOccupation:Number of employeesper occupation as on1 April 2007Appointments andtransfers into thedepartmentTerminations andtransfers out of thedepartmentTurnover rateFinance and economics related, permanent 2 7 6 33%Secretaries and other keyboard operating clerks 0 1 1 100%Total 2 8 7 70%5.3 Reasons why staff are leaving the departmentTermination Type Number % of totalResignation, Permanent 13 81.2%Expiry of Contract 3 18.8%16 100%107

5.4 Promotions by critical occupationOccupationEmployees asat 1 April 2007Promotions toanother salarylevelSalary levelpromotionsas a % ofemployees byoccupationProgressionsto anothernotch within asalary levelNotchprogressionsas a % ofemployees byoccupationAdministrative related, Permanent 4 1 25% 1 25%Client inform clerks (switchboard/ reception/information clerks) 4 0 0 2 50%Communication and information related 0 1 0 0 0Economist 1 1 100% 0 0Electrical and electronics engineering technicians 1 0 0 0 0Finance and economics related 43 17 39.5% 7 16.3%Financial and related professionals 11 9 81.8% 1 9.1%Financial clerks and credit controllers 4 0 0 1 25%Health sciences related 0 0 0 1 0Human resource and organisation development, Permanent 3 0 0 1 33.3%Human resource clerks 2 0 0 0 0Human resource related 2 1 50% 0 0Language practitioners, practitioners and other comm 0 1 0 0 0Other administrative and related clerks and organisors 1 0 0 0 0Secretaries and other keyboard operating clerks 4 2 50% 4 100%Senior Managers 9 7 77.8% 6 66.7%Statisticians and related professionals 1 0 0 0 0Total 90 40 44.4% 24 26.7%108

GAUTENG TREASURY ANNUAL REPORT • Oversight Report5.5 Promotions by salary bandSalary Band Employees 1April 2007Promotions toanother salarylevelSalary bandspromotions as a% of employeesby salary levelProgressions toanother notchwithin a salarylevelNotchprogressions as a% of employeesby salary bandSkilled (Levels 3-5), permanent 3 0 0 2 66.7%Highly skilled production (Levels 6-8), permanent 18 9 50% 5 27.8%Highly skilled supervision (Levels 9-12),Permanent46 18 39.1% 8 17.4%Senior management (Levels 13-16), Permanent 21 13 61.9% 9 42.9%Contract (Levels 6-8) 1 0 0 0 0Contract (Levels 9-12) 1 0 0 0 0Total 90 40 44.4% 24 26.7%109

6. Employment EquityThe tables in this section are based on the formats prescribed by the Employment Equity Act, 55 of 1998.6.1 Total number of employees (including employees with disabilities) in each of the following occupational categories as on31 March 2008Occupational categories Male Female TotalAfrican Coloured Indian White African Coloured Indian WhiteLegislators, snr officials and managers 6 0 1 1 4 0 0 2 14Professionals 28 6 2 2 40 6 3 2 89Clerks 3 0 0 0 9 1 0 1 14Elementary Occupations 2 0 0 0 2 0 0 0 4Total 39 6 3 3 55 7 3 5 121Employees with a disability 0 0 0 0 0 0 0 0 06.2 Total number of employees (including employees with disabilities) in each of the following occupational bands as on31 March 2008Occupational Bands Male Female TotalAfrican Coloured Indian White African Coloured Indian WhiteTop management 0 0 1 0 2 0 0 0 3Senior Management 10 2 0 1 5 0 0 2 20Professionally qualified 22 4 2 2 29 3 2 2 66Skilled technical 5 0 0 0 14 3 1 0 23Semi-skilled and discretionary decision making 2 0 0 0 3 0 0 1 6Unskilled and defined decision making 0 0 0 0 2 1 0 0 3Total 39 6 3 3 55 7 3 5 121Employees with a disability 0 0 0 0 0 0 0 0 0110

GAUTENG TREASURY ANNUAL REPORT • Oversight Report6.3 Recruitment for the period 2007/2008Occupational Bands Male Female TotalAfrican Coloured Indian White African Coloured Indian WhiteSenior Management 1 0 0 0 1 0 0 0 2Professionally qualified 7 2 0 0 6 1 1 1 18Skilled technical 1 0 0 0 2 1 0 0 4Semi-skilled and discretionary decision making 3 0 0 0 1 2 0 1 7Unskilled and defined decision making 0 0 0 0 2 0 0 0 2Total 12 2 0 0 12 4 1 2 33Employees with a disability 0 0 0 0 0 0 0 0 06.4 Promotions for the period 2007/2008Occupational Bands Male Female TotalAfrican Coloured Indian White African Coloured Indian WhiteTop management 0 0 1 0 3 0 0 0 4Senior Management 7 4 1 0 5 0 0 1 18Professionally qualified 9 0 2 2 11 2 0 0 26Skilled technical 3 0 0 0 10 0 1 0 14Semi-skilled and discretionary decision making 0 0 0 0 2 0 0 0 2Total 19 4 4 2 31 2 1 1 64Employees with a disability 0 0 0 0 0 0 0 0 0111

6.5 Terminations for the period 2007/2008Occupational Bands Male Female TotalAfrican Coloured Indian White African Coloured Indian WhiteSenior Management 2 0 0 0 1 0 0 0 3Professionally qualified 4 0 0 0 1 0 0 0 5Skilled technical 1 0 0 0 4 1 0 0 6Semi-skilled and discretionary decision making 1 0 0 0 0 1 0 0 2Total 8 0 0 0 6 2 0 0 16Employees with a disability 1 0 0 0 0 0 0 0 16.6 Disciplinary action for the period 2007/2008Male Female TotalAfrican Coloured Indian White African Coloured Indian WhiteDisciplinary action 2 1 0 0 0 0 0 0 36.7 Skills development for the period 2007/2008Occupational categories Male Female TotalAfrican Coloured Indian White African Coloured Indian WhiteLegislators, senior officials and managers 20 2 2 2 20 0 0 3 49Professionals 6 2 0 1 9 1 1 0 20Technicians and associate professionals 0 0 0 0 0 0 0 0 0Clerks 1 0 0 0 16 3 1 1 22Service and sales workers 0 0 0 0 0 0 0 0 0Skilled agriculture and fishery workers 0 0 0 0 0 0 0 0 0Craft and related trades workers 0 0 0 0 0 0 0 0 0Plant and machine operators and assemblers 0 0 0 0 0 0 0 0 0Elementary occupations 0 0 0 0 0 0 2 0 2Total 27 4 2 3 45 4 2 4 93112

GAUTENG TREASURY ANNUAL REPORT • Oversight Report7. Performance RewardsTo encourage good performance, the department has granted the following performance rewards during the year under review. The information ispresented in terms of race, gender, and disability, salary bands and critical occupations.7.1 Performance Rewards by race, gender, and disability, 2007/2008Number of beneficiariesBeneficiary ProfileTotal number ofemployees in groupCost% of total within group Cost (R’000) Average cost peremployeeTotal African 17 94 18% 260 15,294Male 8 39 20.5% 130 16,250Female 9 55 16.4% 130 14,444Total Asian 3 6 50% 82 27,333Male 2 3 66.7% 77 38,500Female 1 3 33.3% 5 5,000Total Coloured 2 13 15% 58 29,000Male 1 6 16.7% 51 51,000Female 1 7 14.3% 7 7,000Total White 2 8 66.7% 11 5,500Male 2 3 66.7% 11 5,500Female 0 5 0 0 0Total 24 121 19.83% 411 17,125Employees with adisability1 1 100% 10 10,000113

7.2 Performance Rewards by salary bands for personnel below Senior Management Service, 2007/2008Salary Bands Beneficiary Profile CostNumber ofbeneficiariesNumber ofemployees% of total withinsalary bandsTotal Cost (R’000)Average cost peremployeeLower skilled (Levels 1 – 2) 0 2 0 0 0Skilled (Levels 3 – 5) 1 7 14.28% 4 4,000Highly skilled production (Levels 6 – 8) 5 23 21.73% 29 5,800Highly skilled supervision (Levels 9 – 12) 10 66 15.15% 86 8,600Periodic remuneration 0 32 0 0 0Abnormal appointment 0 26 0 0 0Total 16 156 9.6% 119 7,437114

GAUTENG TREASURY ANNUAL REPORT • Oversight Report7.3 Performance Rewards by critical occupations, 2007/2008Critical Occupations Beneficiary Profile CostNumber ofbeneficiariesNumber ofemployees% of total withinoccupationTotal Cost (R’000)Average cost peremployeeAdministrative Related 1 4 25% 17 17,000Client inform clerks 2 1 200% 14 7,000Communication and Information related 0 1 0 0 0Finance and economics related 9 50 18% 154 17,111Financial and related professionals 4 22 18.2% 23 5,750Financial clerks and credit controllers 0 1 0 0 0Food services aids and waiters 0 2 0 0 0Head of Department/ Chief Executive Officer 0 1 0 0 0Health sciences related 1 1 100% 3 3,000Human resources & organisationaldevelopment & related1 5 20% 6 6,000Human resource clerks 0 1 0 0 0Human resource related 0 5 0 0 0Language practitioners interpreters & othercomm.0 1 0 0 0Library mail and related clerks 0 1 0 0 0Messengers porters and deliverers 0 2 0 0 0Other administrat & related clerks andorganisers0 1 0 0 0Secretaries & other keyboard operating clerks 1 9 11.1% 4 4,000Senior Managers 5 13 38.5% 181 36,200Total 24 121 19.8% 402 16,750115

7.4 Performance related rewards (cash bonus), by salary band, for Senior Management ServiceSalary Band Beneficiary Profile Total Cost(R’000)Average cost peremployeeNumber ofbeneficiariesNumber ofemployees% of total withinbandBand A 3 15 20% 76 25,333Band B 3 5 60% 102 34,000Band C 1 2 50% 59 59,000Band D 1 1 100% 46 46,000Total 8 23 34.78% 283 35,375116

GAUTENG TREASURY ANNUAL REPORT • Oversight Report8. Foreign WorkersThe tables below summarise the employment of foreign nationals in the department in terms of salary bands and by major occupation. The tablesalso summarise changes in the total number of foreign workers in each salary band and by each major occupation.8.1 Foreign Workers, 2007/2008, by salary bandSalary Band 1 April 2007 31 March 2008 ChangeNumber % of total Number % of total Number % changeHighly skilled supervision (Levels 9-12) 1 100% 1 100% 0 0Total 1 100% 1 100% 0 0%8.2 Foreign Workers, 2007/2008, by major occupationMajor Occupation 1 April 2007 31 March 2008 ChangeNumber % of total Number % of total Number % changeProfessionals and managers 1 100% 1 100% 0 0Total 1 100% 1 100% 0 0%117

9. Leave utilisation for the period 1 January 2007 until 31 December 2007The Public Service Commission identified the need for careful monitoring of sick leave within the public service. The following tables provide an indicationof the use of sick leave and disability leave. In both cases, the estimated cost of the leave is also provided.9.1 Sick leave, 2007/2008Salary Band Total days % days withmedicalcertificationNumber ofEmployees usingsick leave% of totalemployees usingsick leaveAverage days peremployeeLower skilled (Levels 1 – 2) 2 100% 1 1.5% 2Skilled (Levels 3 – 5) 16 62.5% 4 6.06% 4Highly skilled production (Levels 6 – 8) 46 93.5% 12 18.18% 4Highly skilled supervision (Levels 9 – 12) 166 83.7% 35 53.03% 5Senior Management 24 66.7% 10 15.15% 2Contract (Levels 3 – 5) 6 100% 1 1.5% 6Contract (Levels 9 - 12) 8 87.5% 3 4.5% 3Total 268 83.2% 66 49.2 Disability leave (temporary and permanent), 2007/2008Salary Band Total days taken % days withmedicalcertificationNumber ofEmployees usingdisability leave% of totalemployees usingdisability leaveAverage days peremployeeEstimated Cost(R’000)Total 0 0 0 0 0 0118

GAUTENG TREASURY ANNUAL REPORT • Oversight ReportTable 9.3 summarises the utilisation of annual leave. The wage agreement concluded with trade unions in the PSCBC in 2000 requires managementof annual leave to prevent high levels of accrued leave being paid at the time of termination of service.9.3 Annual Leave, 2007/2008Salary Bands Total days taken Nr of employees who tookleaveAverage days per employeeLower skilled (Levels 1 – 2) 8 2 4Skilled (Levels 3 – 5) 87 6 15Highly skilled production (Levels 6 – 8) 342 23 15Highly skilled supervision (Levels 9 – 12) 960 65 15Senior Management 452 25 18Contract (Levels 3 – 5) 5 1 5Contract (Levels 9 - 12) 36 5 7Total 1 890 127 159.4 Capped leave, 2007/2008Salary BandsHighly skilledproduction (Levels6-8)Total days ofcapped leavetakenAverage numberof days taken peremployeeAverage cappedleave peremployee as at 31December 2007Number ofemployees whotook capped leaveTotal numberof capped leaveavailable at 31December 20079 9 28 1 193 7Total 9 9 28 1 193 7Number ofemployees as at31 December 2007(all levels)9.5 Leave payouts for the period 2007/2008The following table summarises payments made to employees as a result of leave that was not taken.REASONTotal Amount(R’000)Number ofEmployeesLeave payout for 2007/08 non-utilisation of leave for the previous cycle 0 0 0Current and Capped Leave payouts on termination of service for 2007/08 75 4 18,500Total 75 4 18,500Average paymentper employee119

10. HIV/AIDS & Health Promotion Programmes10.1 Steps taken to reduce the risk of occupational exposureUnits/categories of employees identified to be at high risk ofcontracting HIV & related diseases (if any)NAKey steps taken to reduce the riskNA10.2 Details of Health Promotion and HIV/AIDS Programmes for the period 2007/2008Question Yes No Details, if yesHas the department designated a member of the SMS to implementthe provisions contained in Part VI E of Chapter 1 of the Public ServiceRegulations, 2001? If so, provide her/his name and position.Does the department have a dedicated unit or has it designated specificstaff members to promote the health and well being of your employees?If so, indicate the number of employees who are involved in this task andthe annual budget that is available for this purpose.Has the department introduced an Employee Assistance or HealthPromotion Programme for your employees? If so, indicate the keyelements/services of this Programme.XXXMs. S Fourie, Director: HR and Auxiliary Services.No specific budget was set aside for 2007/2008. The unit consists of2 people.24 hour counselling services, face-to-face counselling, behaviouraland health risk assessments, wellness clinics, VCT.Has the department established (a) committee(s) as contemplated inPart VI E.5 (e) of Chapter 1 of the Public Service Regulations, 2001? Ifso, please provide the names of the members of the committee and thestakeholder(s) that they represent.XHas the department reviewed its employment policies and practices toensure that these do not unfairly discriminate against employees on thebasis of their HIV status? If so, list the employment policies/practices soreviewed.XAll departmental policies are non-discriminatory.Has the department introduced measures to protect HIV-positiveemployees or those perceived to be HIV-positive from discrimination? Ifso, list the key elements of these measures.Does the department encourage its employees to undergo VoluntaryCounselling and Testing? If so, list the results that you have you achieved.X All departmental policies and practices are non-discriminatory.Based on voluntary counselling and testing, there is 0% prevalenceof HIV and Aids within the department. Therefore, there have notbeen any specific policies developed to address discrimination basedon HIV and Aids status.X The department hosted 2 sessions in August and December. 100%of employees who participated tested negative.Has the department developed measures/indicators to monitor & evaluatethe impact of its health promotion programme? If so, list these measures/indicators.XA customer satisfaction survey was done in February, which showedthat the majority of participants are aware of what the programmeoffers, and is satisfied with the programme.120

GAUTENG TREASURY ANNUAL REPORT • Oversight Report11. Labour RelationsThe following collective agreements were entered into with trade unions within the department.11.1 Collective agreements, 2007/2008Total collective agreementsNoneThe following table summarises the outcome of disciplinary hearings conducted within the department for the year under review.11.2 Misconduct and disciplinary hearings finalised, 2007/2008Outcomes of disciplinary hearings Number % of totalCorrectional counselling 0 0Verbal warning 0 0Written warning 3 100%Final written warning 0 0Suspended without pay 0 0Fine 0 0Demotion 0 0Dismissal 0 0Not guilty 0 0Case withdrawn 0 0Total 3 100%11.3 Grievances lodged for the period 2007/2008Number% of TotalNumber of grievances resolved 2 100%Number of grievances not resolved 0 0Total number of grievances lodged 2 100%121

11.4 Disputes lodged with Councils for the period 2007/2008NumberNumber of disputes upheldNumber of disputes dismissedNot yet resolvedNot yet resolvedTotal number of disputes lodged 111.5 Strike actions for the period 2007/2008Total number of person working days lost 13Total cost (R’000) of working days lost 9 810.42Amount (R’000) recovered as a result of no work no pay 9 810.4211.6 Precautionary suspensions for the period 2007/2008Number of people suspended 0Number of people whose suspension exceeded 30 days 0Average number of days suspended 0Cost (R’000) of suspensions 0122

GAUTENG TREASURY ANNUAL REPORT • Oversight Report12. Skills DevelopmentThis section highlights the efforts of the department with regard to skills development.12.1 Training needs identified 2007/2008Occupational Categories Gender Number ofemployees asat 1 July 2007Training needs identified at start of reporting periodInternships /LearnershipsSkillsProgrammes& other shortcoursesOther forms oftrainingTotalLegislators, senior officials and managers Female 17 0 20 12 32Male 21 0 20 15 35Professionals Female 25 8 15 9 32Male 24 7 15 2 24Technicians and associate professionals Female 0 0 0 0 0Male 0 0 0 0 0Clerks Female 17 0 4 14 18Male 2 0 4 0 4Elementary Female 2 0 1 0 1Male 1 0 1 0 1Sub Total Female 61 8 40 35 83Male 48 7 40 17 64Total 109 15 80 52 147123

12.2 Training provided 2007/2008Occupational Categories Gender Number ofemployees asat 1 July 2007Training provided within the reporting periodInternships /LearnershipsSkillsProgrammes& other shortcoursesOther forms oftrainingTotalLegislators, senior officials and managers Female 23 0 13 10 23Male 26 0 13 13 26Professionals Female 11 8 10 7 25Male 9 10 10 2 22Technicians and associate professionals Female 0 0 0 0 0Male 0 0 0 0 0Clerks Female 21 0 3 13 16Male 1 0 3 0 3Elementary Female 2 0 1 0 1Male 1 0 0 0 0Sub Total Female 57 8 27 30 65Male 37 10 26 15 51Total 94 18 53 45 116124

GAUTENG TREASURY ANNUAL REPORT • Oversight Report13. Injury on dutyThe following tables provide basic information on injury on duty.13.1 Injury on duty, 2007/2008Nature of injury on duty Number % of totalRequired basic medical attention only 0 0Temporary Total Disablement 0 0Permanent Disablement 0 0Fatal 0 0Total 0 0125

GAUTENG TREASURY ANNUAL REPORT • Oversight Report14.2 Analysis of consultant appointments using appropriated funds, in terms of Historically Disadvantaged Individuals (HDIs)Project TitlePercentage ownershipby HDI groupsPercentagemanagement by HDIgroupsNumber of Consultantsfrom HDI groups thatwork on the projectImplementation of eMapp 0 40 2Conversion of municipal financial statements: GAMAP/GRAP 60 10 4Operating Manuals & Generic Framework Municipalities 25 21 2BCP Report 30 23Fixed Assets valuation 59 0 6Employee Assistance Programme 0 0 0Industrial Theatre 1 1 10Set up of PPP unit 20 16Implementation of filing system 0 0 2Set up CFO office 100 55 3Fraud Prevention Plan 100 0 3ABSA/GPG Service Level Agreement 100 0 1Assist CFO office with asset strategy implementation 100 0 2Audit Committee Member Fees 1 1 1Finance Function Effectiveness project 12 15 4Voluntary Counselling 0 4 2Motivational Speakers 1 1 1Secondment of professional service 1 1 1Budget day 0 0 0Translation and editing 0 0 0127

14.3 Report on consultant appointments using Donor fundsProject TitleTotal Number ofconsultants thatworked on the projectDuration:Work daysDonor and Contractvalue in RandNot Applicable14.4 Analysis of consultant appointments using Donor funds, in terms of Historically Disadvantaged Individuals (HDIs)Project TitlePercentage ownershipby HDI groupsPercentagemanagement by HDIgroupsNumber of Consultantsfrom HDI groups thatwork on the projectNot Applicable128

Outlook for the coming yearOutlook for thecoming year

GAUTENG TREASURY ANNUAL REPORT • Outlook for the coming yeara Director as well as support staff that will be focusing on a monitoringandevaluation framework, service delivery improvement and thepromotion of cross-cutting aspects including gender, youth and peoplewith disabilities.The Office of the Head of Department will continue to lead thecoordination and facilitation of appropriate communication and decisionstructures, ensuring improved coordination of management processes todeliver effective and quality services.Corporate ServicesThe Chief Directorate: Corporate Services undertook a strategic- andoperational review process in April 2008 where plans and projects wereidentified in ensuring that it further improves its services to clients.Emphasis is being placed on collaborating in a unified manner throughjoint projects, thereby creating synergy and maximum impact.SECTION VIOutlook for 2008/09PROGRAMME 1AdministrationOffice of the Head of DepartmentSince the 2008/09 financial year will be the last financial year in thecurrent political term of Office, Gauteng Treasury will be formulatingits strategic plan for the period 2009 – 2014 in the first quarter of thecoming financial year.Capacity will be increased in the HOD’s office through the appointment ofHR and Auxiliary Services: Since most of the HR related strategies andpolicies were developed and approved in the previous financial year, thefocus for the year ahead will be on implementing specific interventionsin line with the action- and implementation plans as per the strategiesand policies. More emphasis will be placed on recruitment and retentioninitiatives in ensuring a reduced vacancy rate of at least 10% by the endof 2008/09.A Workplace Skills Plan for 2008/09 that is informed by a competenceframework and assessment of the current skills will be developed andimplemented. Efforts of ensuring that Gauteng Treasury meets itsemployment equity targets will be made. The Internship Programme willrun from 1 April 2008 to 31 March 2009. An Employee Wellness Strategywill be developed and implemented in support of the notion of creatingquality work-life for its employees.A fully fledged Auxiliary Services Unit will be established that will befocusing on occupational health and safety aspects; including security,facilities management (registry system, office accommodation) andgovernment transport services.Communications: A Communication strategy for Gauteng Treasurywill be finalised by the end of the first quarter, focusing on amongstothers; internal- and external communication, media liaison, branding131

and marketing, events management and communication protocol.The communications unit will be coordinating and facilitating eventsmanagement related functions for all treasury events (includingcommemorative days, exhibitions, road shows, etc.)Communication mechanisms will be enhanced through the developmentof various publications, internal newsletters, regular updating of theTreasury Website (www.treasury.gpg.gov.za) and the development andimplementation of an intranet for internal staff.Information Technology: The IT Unit is currently being establishedand the focus for the next financial year will be on establishing systems,procedures and policies which include the implementation of an IT helpdesk, call-logging system, back-up strategy, development of a disasterrecovery plan and automation of internal processes (e.g. electronic leaveforms and procurement procedures).thereby achieving our objectives.Improved communication and interaction will enable the unit to betterunderstand the business of all clients and improve information sharing.The sub-programme will develop a financial management proceduremanual and a financial database to be accessible by all clients.A better performance management framework will be developed withthe assistance of external expertise to assist with performance reportingand to create a more effective tool for auditing of the Annual PerformancePlans.The IT unit will further be working closely with the Communications Unitin developing and rolling out an intranet solution for the department.Enhancements of electronic communication will also be made throughimplementation of mobile solutions.Financial Management (Office of the Chief Financial Officer)The unit will introduce the following measures to improve on itsfunctioning:• Revise and improve compliance procedures on internal audit andrisk management in collaboration with the GSSC.• Specialised training will be rendered to all units where there isa need for better financial management including supply chainmanagement.• The unit will re-examine its structure in conjunction with theNorms and Standards unit to establish whether more capacity isneeded in the unit.• Budgetary control will be sharpened through completingoperational plans for all units to proactively do demand planningand to have better control over programme performance.Ongoing focus will be placed on developing the required skills in financialmanagement to render a professional support service to the various units,132

GAUTENG TREASURY ANNUAL REPORT • Outlook for the coming yearPROGRAMME 2Sustainable Resource ManagementBudget ManagementAlthough the preparation and management of the budget processtook place as planned, the challenges that were experienced during thefinancial year will be addressed by focusing on the following:• Reviewing the planning and budgeting framework for theensuing financial year and MTEF;• Improving the analysis of submissions by creating sector specificteams within Sustainable Resource Management (SRM);• Developing appropriate information system necessary for budgetpreparation, implementation and retrieval of information toinform and enhance decision making in the province;• Strengthening the quality of published documents;• Further enhance coordination within SRM and utilize reports toinform sustainable resource allocation in the province and• Promote and implement budget reforms.Public FinanceThe attainment of the unit’s outputs within the required timeframesis conditional upon departmental compliance. It is important thatdepartments meet deadlines and legislative requirements/ prescriptionsto ensure the outputs are not jeopardised. The unit will continue toengage in process to improve reporting to ensure that departmentscomply with requirements of the PFMA and DORA. Emphasis has beenon spending capability, but the focus ought to change to look at valuefor money. The challenge has always been on availability and credibilityof information on performance. Public Finance will try to get the buy inof departments in conducting efficiency, value for money and economicevaluation studies. The unit will continue to give active support for theimplementation of the Infrastructure Delivery Improvement Programmeto all infrastructure departments in the province. All vacant posts will befilled during 2008/09 financial year to attract the necessary skills.The following are the planned quality improvement measures:• Improved relationship with external and internal stakeholdersto improve service delivery and reporting in terms of PFMA andDORA.• Creating partnerships with both internal and external stakeholdersto improve service delivery through leveraging technical expertiseand capacity as well as enhancing research capabilities.• Development and implementation of economic and quantitativetools in order to achieve optimal resource allocation.• Support departments to improve the quality of non-financial andfinancial reports.• Provide strategic support to departments regarding thepreparation of 2010 FIFA World Cup• Roll-out IDIP model to all provincial departments• Develop activity based costing framework for departmentaloperational plans• Conduct efficiency gains studiesFiscal Policy and Economic AnalysisThe unit intends building on its past achievements by working closely withall GPG departments to highlight the importance of effective and efficientdebtor management. A provincial revenue strategy is currently beingdeveloped to simply revenue management for the main own revenuedepartments. In addition, the MTBPS is to examine the policy frameworkthe policy and framework and challenges confronting GPG in its questto meet both provincial and national service delivery priorities. The unitwill also develop a revenue forecasting model to assist department withtheir revenue projections.As on-going projects, the PERO and SER will be published on an annualbasis with the objective to provide a well research review and outlookof the provincial economy so as to inform other policy decisions. Theunit will collaborate with other department to ensure that its research isinformative and remain relevant. The unit will publish quarterly bulletinson topical issues. It intends to use the developed SAM to assess theeconomic impact of different projects in the province and also to finalizethe development of the CGE model together with the University ofPretoria.Public Private PartnershipThe origin of the proposal to integrate the Gauteng PPP Unit underSustainable Resource Management (SRM) stemmed from the Provincial133

Treasury’s mandate to create a coherent approach in infrastructure andimproved service delivery efficiency in all sphere of government. Sucha mandate will face current challenges that government is facing inaddressing serious backlog, under performance and the absence ofspecialized skills and authority to manage and regulate PPP’s, therebyprotecting the interest.The strategic objectives identified for this integration plan to strengthenexisting achievements and address the gaps identified. In support of theplan, the unit will secure private financial support to enhance provincialrevenue through private investment in infrastructure and service delivery.It will evolve as a dynamic and sustainable centre of excellence for PPP’s,providing technical assistance to public institutions through feasibility,procurement and management. It will ensure successful identificationof PPP project opportunities that will yield value for all stakeholders andpromote an enabling environment through PPP’s in the Municipal field.In support of the above objective, the unit will ensure that such aresupported by sufficient resources, new appointments and sufficienttraining to develop skills in the PPP field. Furthermore, the PPP unit willcommunicate the government’s PPP strategy clearly and consistentlyto all departments, local authorities, potential investors and otherstakeholders.PROGRAMME 3Provincial Financial Management ReformsNorms and StandardsThe unit will continue to ensure that Audit Committees are used as aneffective risk mitigation conduit and thus ensure that the recommendationof the audit committee are embedded in the operational processesof Provincial Department and entities. On Supply Chain Managementwe are endeavouring to interface more at an operational level on thestructuring and functioning of Procurement Committees both withinProvincial Departments (including its entities) and municipalities. Inrelation to our year on year institutional support to the CFO units inProvincial Departments by means of our Financial Management Capacitybuilding Programme, we have opted to synchronize this initiative with theFFE study which was conducted last year with all Provincial Departmentsby the office of the Provincial Accountant General and to allow for therecommendation of this review to take its course in the proceedingyear.Municipal Financial AccountingIn 2008/09 the unit will continue to provide support with accountingstandards and AFS. We will also be embarking on support around internalaudit and Audit committee so that these functions are used effectivelyas risk management tools, achievement of reliable reporting, efficientservice delivery and compliance with statute.Municipal Budgets and ComplianceGoing forward the Gauteng Municipal Hands on Support Program willgain added momentum through our partnership agreement with theDevelopment Bank of South Africa through the Senya Manje Program. Inan effort to enhance our oversight role over municipalities and streamlineall municipal and financial reporting we endeavour to launch the GautengMunicipal Portal which will serve as a one stop electronically interactivedata warehouse on local government in the province. 2008/2009 willsee the implementation of the Gauteng Post Summit ImplementationPlan The summit process and implementation of the program of actionreflects a partnership between ‘Gauteng Treasury’, the ‘Department ofLocal Government’ and all of the Gauteng municipalities. Leadership134

GAUTENG TREASURY ANNUAL REPORT • Outlook for the coming yearover the implementation process will continue to be shared by the twoDepartments.To facilitate ongoing technical support and ensure collective responsibilitywith municipalities, the ‘Municipal Manager’s Forum’ and the ‘ChiefFinancial Officer’s Forum’ will be retained as the primary platform forimplementation initiatives and for ongoing guidance to implementation.PROGRAMME 4Provincial Financial Management and GovernanceAsset Management• Following the implementation of GRAP/ GAMAP standards inmunicipalities, asset management strategy will be implementedat municipal level in 2008/9. The implementation will commencewith asset management awareness workshops, development ofthe municipal asset management framework and implementationplans and supporting municipalities in implementation of theasset management strategy.• Supply chain management will also be introduced to municipalitiesto ensure all 11 municipalities in Gauteng have approved supplychain management policies.• An ongoing support coupled with training will be provided toensure municipalities comply with both asset management andsupply chain management frameworks• The Gauteng asset management roadmap, a document whichwas developed following a benchmarking trip to the Ministryof Defence in United Kingdom will be tabled to the ExecutiveCommittee for endorsement of recommendations;• Valuation of immovable assets will be undertaken following theenactment of the Government Immovable Asset ManagementAct (GIAMA) and the rollout of the valuation model by theNational Department of Public Works.Risk Management• Facilitate the implementation of Enterprise Risk Managementin municipalities by setting up governance structures such asfacilitating the appointment of Chief Risk Officers, setting upRisk Management Committees. Ensure that the risk managementcomponent create working relationships with internal audit andaudit committees.• Enhance the process of Public Entities listing in the province bytraining CFOs on the listing process through workshops. Alsoset up preliminary review sessions before documents are sent toNational Treasury.• Enhance the financial management skills development byreviewing and documenting processes so that departments135

develop Standard Operating Manuals.• Enhance the functioning of audit committees as a riskmanagement tool by amending the Audit Committee Charter toensure it informs all the activities that relate to the running ofAudit Committees. Establishing the Provincial Audit Committeeto deal with transversal issues that affect the various AuditCommittees and also deal with issues affecting the Province as awhole. The committee will also be responsible for the approval ofthe Provincial Revenue Fund annual financial statements.Provincial Financial Accounting• In 2008/09, the unit will continue exerting its efforts to assistdepartments in implementing financial accounting reforms toensure that all departments achieve an unqualified audit.• The monthly reporting will be intensified and the quarterly reportswill be sent to Legislature.• In order to bridge the gap on capacity, the unit will work withdepartments to close the gaps identified by the FFE reports.Assets and Liabilities• Pursue the implementation of a Cash and Treasury ManagementSystem. Current manual systems are perceived to be a high riskconsidering the amount of cash and investments we are dealingwith on a daily basis.• Quarterly workshop on cash flow forecasting, best cash flowforecasting techniques and general cash flow management.Engage the services of specialists on the topic as well as institutionsof high learning.• Close-up office with access control for Assets and Liabilities staff.Similar setup of dealing rooms in Treasury offices of investmentand merchant banks. It is risky to have an environment dealingwith transfers of billions of Rands accessible anytime by anybody.Signatures of key employees can be stolen and forged to defraudthe government.• Enhance communication channels internally and externally.Improved communication can lead to improved service delivery.136

Gauteng FundGauteng Fund

GAUTENG TREASURY ANNUAL REPORT • Gauteng FundTable of ContentsReport of the Auditor General 140Statement of financial position 145Statement of financial performance 146Cash flow statement 147Statement of changes in net assets 148Notes to the annual financial statements 149ANNUAL FINANCIAL STATEMENTSGAUTENG FUND PROJECT OFFICE31 MARCH 2008139

REPORT OF THE AUDITOR-GENERALREPORT OF THE AUDITOR-GENERAL TO THE GAUTENG PROVINCIALLEGISLATURE ON THE FINANCIAL STATEMENTS AND PERFORMANCEINFORMATION OF THE GAUTENG FUND PROJECT OFFICE FOR THEYEAR ENDED 31 MARCH 2008REPORT ON THE FINANCIAL STATEMENTSIntroduction1) I have audited the accompanying financial statements of theGauteng Fund Project Office which comprise the balance sheetas at 31 March 2008, income statement, statement of changesequity and cash flow statement for the year then ended, and asummary of significant accounting policies and other explanatorynotes, as set out on pages 145 to 151.4)5)I conducted my audit in accordance with the InternationalStandards on Auditing and General Notice 616 of 2008, issued inGovernment Gazette No. 31057 of 15 May 2008. Those standardsrequire that I comply with ethical requirements and plan andperform the audit to obtain reasonable assurance on whether thefinancial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidenceabout 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 ofthe financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internal controlrelevant to the entity’s preparation and fair presentation of thefinancial statements in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internalcontrol.Responsibility of the accounting officer for the financial statements2) The accounting officer is responsible for the preparation and fairpresentation of these financial statements in accordance withthe South African Statements of Generally Accepted AccountingPractice (SA Statements GAAP) and in the manner required bythe Public Finance Management Act, 1999 (Act No. 1 of 1999)(PFMA). This responsibility includes:• designing, implementing and maintaining internal control relevantto the preparation and fair presentation of financial statementsthat are free from material misstatement, whether due to fraudor error• selecting and applying appropriate accounting policies• making accounting estimates that are reasonable in thecircumstances.Responsibility of the Auditor-General3) As required by section 188 of the Constitution of the Republic ofSouth Africa, 1996 read with section 4 of the Public Audit Act,2004 (Act No. 25 of 2004) (PAA), my responsibility is to expressan opinion on these financial statements based on my audit.6)7)An audit also includes evaluating the:• appropriateness of accounting policies used• reasonableness of accounting estimates made bymanagement• overall presentation of the financial statements.I believe that the audit evidence I have obtained is sufficient andappropriate to provide a basis for my audit opinion.Basis for qualified opinionOperating expenses8) AC 101 Presentation of Financial Statements states that financialstatement shall be presented at least annually. When an entity’sbalance sheet date changes and the annual financial statementsare presented for a period longer or shorter than one year, anentity shall disclose, the reason for using a longer or shorterperiod.Included in operating expenses was an amount of R2 459 812which related to expenses that were incurred in the prior financialperiod. Had the prior year expenses not been included in thecurrent year’s financial statements, operating expenses would140

GAUTENG TREASURY ANNUAL REPORT • Gauteng Fund9)have been reduced by R2 459 812 and net income increased byR2 459 812.The financial activities of the Gauteng Fund Project Office werepreviously accounted for as a programme under the Departmentof Economic Development and were transferred to GautengTreasury with effect from 5 June 2007. On 1 October 2007Gauteng Fund Project Office was granted approval to operateas a trading entity. Included in the financial statements wereexpenses of R13 714 660 incurred prior to 1 October 2007. Noapproval was obtained from Treasury to allow the Gauteng FundProject Office to account for these expenses retrospectively.financial performance and cash flows for the year then ended,in accordance with the South African Statements of generallyAccepted Accounting Practice and in the manner required by thePFMA10)Management was unable to provide evidence that consultingservices incurred during the year were procured in terms of thesupply chain management regulations. Therefore, I was not ableto determine whether any adjustments were necessary to discloseirregular expenditure in the financial statements.Accounts payable11) I was unable to verify or confirm by alternative means thecompleteness and valuation of accounts payable as managementdid not provide supporting documentation for accruals amountingto R219 836. Accordingly, I was not able to determine whetherany adjustments might have been necessary to the amountsshown in the financial statements for accounts payable, operatingexpenses, surplus for the period and accumulated surplus.Generally Accepted Accounting Practice12) AC 126 states that an entity shall disclose remuneration of keymanagement personnel in the financial statements. The tradingentity did not disclose any information relating to remunerationfor key management personnel in the financial statements.Accordingly, I was not able to satisfy myself regarding thecompleteness and accuracy of related party disclosures.Qualified opinion13) In my opinion, except for the effects of the matters described inthe Basis for qualified opinion paragraphs, the financial statementspresent fairly, in all material respects, the financial position ofthe Gauteng Fund Project Office as at 31 March 2008 and its141

OTHER MATTERSI draw attention to the following matters that relate to my responsibilities in the audit of the financial statements:Internal controls14) Section 38(1) (a) (i) of the PFMA states that the accounting officer must ensure that the trading entity has and maintains effective, efficientand transparent systems of financial and risk management and internal control. The table below depicts the root causes that gave rise tothe inefficiencies in the system of internal control, which led to a disclaimer of opinion. The root causes are categorised according to the fivecomponents of an effective system of internal control. In some instances deficiencies exist in more than one internal control component.Reporting item Control environment Risk assessment Control activities Information andcommunicationMonitoringOperating expenses X XAccounts payable X XSA GAAP disclosures X XControl environment: establishes the foundation for the internal control system by providing fundamental discipline and structure for financial reporting.Risk assessment: involves the identification and analysis by management of relevant financial reporting risks to achieve predetermined financial reportingobjectives.Control activities: policies, procedures and practices that ensure that management’s financial reporting objectives are achieved and financial reporting riskmitigation strategies are carried out.Information and communication: supports all other control components by communicating control responsibilities for financial reporting to employees and byproviding financial reporting information in a form and time frame that allows people to carry out their financial reporting duties.Monitoring: covers external oversight of internal controls over financial reporting by management or other parties outside the process; or the application ofindependent methodologies, like customised procedures or standard checklists, by employees within a process.142

GAUTENG TREASURY ANNUAL REPORT • Gauteng FundNon-compliance with applicable legislation15) Treasury RegulationsSection 76 of the PFMA requires the trading entity to comply withany regulations or instructions issued by the National Treasury.The trading entity did not comply with Practice Note 6 of 2007/08which requires the trading entity to report within ten (10) workingdays to the relevant treasury and the Auditor-General, all caseswhere goods and services above the value of R1 million (VATincluded) were procured in terms of Treasury Regulation 16A6.4.Three contracts with a total value of R7 421 400 were awardedwithout following the competitive bidding process. Thesetransactions were not reported as required by Practice Note 6 of2007/08.Matters of governance16) The PFMA tasks the accounting officer with a number ofresponsibilities concerning financial and risk managementand internal control. Fundamental to achieving this is theimplementation of certain key governance responsibilities, whichI have assessed as follows:Matter of governance Yes NoAudit committee• The trading entity had an audit committee in operation throughout the financial year.X• The audit committee operates in accordance with approved, written terms of reference.X• The audit committee substantially fulfilled its responsibilities for the year, as set out in section 77 of the PFMA and TreasuryRegulation 3.1.10.Internal audit• The trading entity had an internal audit function in operation throughout the financial year.X• The internal audit function operates in terms of an approved internal audit plan.X• The internal audit function substantially fulfilled its responsibilities for the year, as set out in Treasury Regulation 3.2.XOther matters of governanceThe annual financial statements were submitted for audit as per the legislated deadlines (section 40 of the PFMA)The financial statements submitted for audit were not subject to any material amendments resulting from the audit.No significant difficulties were experienced during the audit concerning delays or the unavailability of expected information and/or theunavailability of senior management.XXXX143

APPRECIATION17)The assistance rendered by the staff of the Gauteng Fund ProjectOffice during the audit is sincerely appreciated.Johannesburg5 August 20085 August 2008144

GAUTENG TREASURY ANNUAL REPORT • Gauteng FundGAUTENG FUND PROJECT OFFICESTATEMENT OF FINANCIAL POSITION31 MARCH 2008NOTE R’000ASSETSNon-current assets 88Computer equipment 2 78Office equipment 2 10Current assets 12 326Treasury Grant 3 12 326Total assets 12 414EQUITY AND LIABILITIESCapital and reserves 10 391Surplus for the year 4 10 391Current liabilities 2 023Trade and other payables 5 2 023Total Equity and liabilities 12 414145

STATEMENT OF FINANCIAL PERFORMANCE31 MARCH 2008INCOME R’000Provincial Treasury grant 40 000EXPENSESAdministrative expensesAgency fees 31Groceries 1Rent private bag and post box 1Stationery and printing 8Operating expensesConsulting and specialist services - Financial & management consulting 16 128Consulting and specialist services - Agent professional staff 10 002Communication cost (telephone and fax) 5Depreciation 7Travel and accommodation 1 960Staff CostsSalaries 1 466NET SURPLUS FOR THE YEAR 10 391146

GAUTENG TREASURY ANNUAL REPORT • Gauteng FundCASH FLOW STATEMENT31 MARCH 2008NOTE R’000CASH FLOWS FROM OPERATING ACTIVITIESCash paid to suppliers and employees 12 421Cash generated from/(utilised in) operations 6 12 421Interest or dividends received/(paid) 0Net cash inflows/outflows from operating activities 12 421CASH FLOWS FROM INVESTING ACTIVITIESAcquisition of property, plant and equipment (95)Net cash inflows/outflows from investing activities 7 (95)CASH FLOWS FROM FINANCING ACTIVITIES 0Net cash inflows/outflows from financing activities 0Net increase/(decrease) in cash and cash equivalents 12 326Cash and cash equivalents at the beginning of the year 0Cash and cash equivalents at the end of the year 8 12 326147

STATEMENT OF CHANGES IN NET ASSETSContributionsfrom ownersAccumulatedSurplus/(Deficit)FinancialinstrumentreserveRevaluationreserveForeigncurrencytranslationreserveMinorityInterestOther reservesTotal Equity(ENTITY)Surplus/(deficit) for the year 10 391 10 391Balance as at 31 March 2008 10 391 10 391148

GAUTENG TREASURY ANNUAL REPORT • Gauteng FundNOTES TO THE ANNUAL FINANCIAL STATEMENTS31 MARCH 20081. ACCOUNTING POLICIESa. Statement of ComplianceThe financial statements are prepared in accordance with the SouthAfrican Statements of Generally Accepted Accounting Practice (GAAP)including any interpretations of such statements issued by the AccountingPractices Board, with the effective Standards of Generally RecognisedAccounting Practices (GRAP) issued by the Accounting Standards Boardreplacing the equivalent GAAP Statements as follows:Standard of GRAPGRAP 1: Presentation of financialstatementsGRAP 2: Cash flow statementsGRAP 3: Accounting policies,changes in accounting estimates anderrorsReplaced Statement of GAAPAC101: Presentation of financialstatementsAC118: Cash flow statementsAC103: Accounting policies, changesin accounting estimates and errorsCurrently the recognition and measurement principles in the aboveGRAP and GAAP Statement do not differ or result in material differencesin items presented and disclosed in the financial statements. Theimplementation of GRAP 1, 2 and 3 has resulted in the following changesin the presentation of the financial statements:Terminology differences:Standard of GRAPStatement of financial performanceStatement of financial positionStatement of changes in net assetsNet assetsSurplus/DeficitAccumulated surplus/deficitContributions from ownersDistributions to ownersReplaced Statement of GAAPIncome StatementBalance SheetStatement of changes in equityEquityProfit/LossRetained EarningsShare CapitalDividendsThe cash flow statement can only be prepared in accordance with thedirect method.Specific information has been presented separately on the statement offinancial position.Paragraph 11 – 15 of GRAP has not been implemented due to the factthat the local and international budget reporting standard is not effectivefor this financial year. Although the inclusion of budget informationwould enhance the usefulness of the financial statements, non-disclosurewill not affect the objective of the financial statements.b. Basis of measurementThe financial statements have been prepared on the historical costbasis.c. Significant accounting policiesi. Property, plant and equipmentEquipment is stated at historical cost less accumulated depreciation.Depreciation is charged so as to write-off the cost of sales over itsexpected useful lives using the straight-line basis, over 3 years forComputer equipment and 10 years for Office equipmentii. RevenueAs per instruction of the Gauteng Treasury, the grant of R40million which was set aside for the 2007/08 financial year hasbeen recognised as revenue for the year.iii. Income taxAs the Gauteng Fund Project Office is not a separate entity fromthe Gauteng Department of Treasury, it is not registered separatelyfor income tax, or VAT. The PAYE commitment was managed andsettled through the Department of Economic Development.iv. Cash and cash equivalentsGauteng Treasury instructed the inclusion in the financialstatements of a government grant which was set aside for the2007/08 financial year. Upon instruction, the unutilized portionof this will be shown as Cash and cash equivalents.149

2. EQUIPMENTOFFICE EQUIPMENTCOMPUTEREQUIPMENTTOTALR’000 R’000 R’000Additions 10 85 95Depreciation 0 7 7Closing net carrying amount 10 78 88At 31 March 20083. CASH AND CASH EQUIVALENTSGauteng Treasury instructed the inclusion in the financial statements of a grant of R 40 million which was set aside for the 2007/08 financial year. Asreflected in the financial statements approximately R 12 million was not utilized and these funds will be available for utilization by the project officein the next financial year. This amount has been recorded as Cash and cash equivalents.4. SURPLUS FOR THE YEARThe surplus for the year constitutes the balance left for spending after deducting all expenses paid and accrued expenses for the financial year fromthe Gauteng Treasury grant of R 40 million which was set aside for the 2007/08 financial year.5. TRADE AND OTHER PAYABLESAccruals 2 023TOTALR’0006. CASH GENERATED FROM/(UTILISED IN) OPERATIONSTOTALR’000Surplus/(deficit) before tax 10 391Non-cash movements/working capital changes 2 030Depreciation 7Increase/(Decrease) in payables 2 023Net cash flows from operating activities 12 421150

GAUTENG TREASURY ANNUAL REPORT • Gauteng Fund7. CASH GENERATED FROM/(UTILISED IN) INVESTING ACTIVITIESTOTALR’000Acquisition of office equipment (10)Acquisition of computer equipment (85)Net cash flows from investing activities (95)8. CASH AND CASH EQUIVALENTS AT THE END OF THE YEARCash and cash equivalents 12 326TOTALR’0009. DETAILS ON EXPENDITURENormal accounting principles do not require disclosure in this regard. However, on instruction from the HOD Treasury we provide a summaryexplanation of certain significant expenses:i. Consultants and specialist service providers – primarily this comprises the procurement of services for legal advisory, strategy, financial supportand telecommunications related expertise. In addition to these service providers, a monthly fee was contractually payable to an entity for theestablishment of the Gauteng Fund which is in line with the mandate of the project as approved by the GPG Exco.ii. Salaries – this cost relates to salaries paid to the project director, the office manager and an employee who provided IT support. The figures forthese amounts were not verified as a result of a difficulty in obtaining the relevant “Persal” reports at the time of preparing the accounts.iii. Travel and accommodation – Overseas trips were made for the purposes of raising capital and to investigate the opportunities existing inthe overseas market for funding of feasibility exercises. Trips were made to Europe, USA and Dubai. The delegations included capital raisingexperts, the project director, members of the executive management of the GPG and the MEC Finance in certain instances.151

Acronyms and AbbreviationsAcronyms andAbbreviations

GAUTENG TREASURY ANNUAL REPORT • Acronyms and AbbreviationsAcronyms and AbbreviationsACAOAGAMRBASBBECFODACDEDDPTRWDoHDPSADORAEAPEEEXCOFFCFMSGAAPGAMAPGCRAudit CommitteeAccounting OfficerAuditor GeneralAsset Management ReformsBasic Accounting SystemBlack Economic EmpowermentChief Financial OfficerDepartmental AcquisitionDepartment of Economic DevelopmentDepartment of Public Transport, Roads and WorksDepartment of HealthDepartment of Public Service and AdministrationDivision of Revenue ActEmployee Assistance ProgrammeEmployee EquityExecutive CommitteeFinancial Fiscal CommissionFinancial Management SystemGenerally Accepted Accounting PracticeGenerally Accepted Municipal Accounting PracticeGlobal City Region155

GDSGlobal and Development StrategyPFMAPublic Finance Management ActGIAMAGovernment Immovable Asset Management ActPPPPublic Private PartnershipGPGGauteng Provincial GovernmentPTProvincial TreasuryGIAMAGovernment Immovable Asset Management ActPTCProvincial Treasury CommitteeGTGauteng TreasurySCOFStanding Committee on FinanceGSSCGauteng Shared Service CentreSCMSupply Chain ManagementHOAHome Owners AllowanceSCOPAStanding Committee on Public AccountsHODHead of DepartmentSDBIPService Delivery Budget Implementation PlanHDIsHistorically Disadvantaged IndividualsSDIService Delivery ImprovementHRHuman ResourcesSLAService Level AgreementHRDHuman Resources DevelopmentSMSSenior Management ServicesIAInternal AuditSRMSustainable Resource ManagementIDIPInfrastructure Delivery Improvement ProgrammeTCFTechnical Committee on FinanceIDPIntegrated Development PlanningMECMember of Executive CouncilMFMAMunicipal Finance Management ActMTBPSMedium Term Budget Policy StatementsMTEFMedium Term Expenditure FrameworkNCOPNational Council of ProvincesFor additional copies please contact the Gauteng Treasury at:PAAPERSALPublic Audit ActPersonnel and Salary System94 Main Street, Matlotlo House, Marshalltown, 2107Private Bag x12, Marshalltown, 2107Tel : 011 355 8259Fax : 011 355 8228web: www.treasury.gpg.gov.za156

ANNUAL REPORT2007/8 FINANCIAL YEAR