GDF Annual Report - Gauteng Provincial Treasury

SECTION 4: ANNUAL REPORT OF FINANCIAL THE ACCOUNTING STATEMENTS OFFICERReport by the Accounting Officerto the Executive Authority andParliament/Provincial Legislatureof the Republic of South Africa.1. General review of the state offinancial affairsThe vision of the Gauteng Department of Finance(GDF) is “to be an activist, developmental andinterventionist department; providing strategic andoperational support to the Province.” As such, the GDFsought to lead by example in the midst of cash flowchallenges that were experienced by the province. Itsrobust reviews of expenditures and commitments haveborne fruit while minimising the downside effects onservice delivery. Evidently, these efforts culminated inthe stabilisation of relationships with key stakeholdersand suppliers. To this end, the departmentprioritised the timely settlement of SMME accounts,while implementing mutually beneficial paymentarrangements with established suppliers. During the2010/11 financial year, the department improvedits financial position from a negative of R115m to apositive R15m compared to the end of 2009/10.Moreover, and during the same period, the TreasuryDivision reported a downward revision of revenuesfrom R128m to R54m due to the depletion of provincialreserves. However, the 2010/11 financial position wasturned around to a positive R42m. This was attributedto stable revenue collection.Part of the Premier’s 2009 pronouncement was toreview the mandate of the Shared Service Centre. Asa result, the department revisited all outstanding interdepartmentalaccounts receivable to better manageits outstanding debts. We also wrote off about R30mof inter-departmental receivable. This was our gestureof providing financial assistance to seriously affectedprovincial departments, which has significantlyimproved the quality of our debtor’s book.Provincially, the GDF successfully secured thelegislature’s condonation of R1.4bn in unauthorisedexpenditure. This approval enabled our reduction ofour unauthorised expenditures.1.1 Major Projects UndertakenThe contact centre was in-sourced during the yearunder review. This function was identified as a coreservice delivery factor and sufficiently important tobe managed within the department. However, it cameat an early termination cost of R145m, part of whichwas settled during the financial year, at which time thetransition was successfully completed.1.2 Spending trendsThe Department spent 98% of its appropriated budgetfor the year under review. A comparative analysisthereof is contained in table 1 below which indicatesa general decrease in both budget and spending levelsfor the fiscal years 2009/10 and 2010/11 respectively.The decrease in appropriations adversely impacteddepartmental cash-flows, and thus compromisedsupplier payments.Table 1: Comparative analysis of annual budgets andexpendituresFinalAppropriationSpending forthe year2010/11R’000Under-spending R30, 586(2%)2009/10R’000% ChangeR1,515,008 R1,520,701 (0.37)R1,484,422 R1,505,711 (1.4)R14, 990(1%)The overall under spending of R30, 6m was mainlydriven by the delayed utilisation of capital budgetsamounting to R28m. This delay in the replacementof capital assets was due to the prioritisation cashavailable for the settlement of accrued expenses. Wehave since applied to roll some of these resources over,in order to fund the replacement of capital equipmentin the new financial year.140140Annual Report 2010 / 2011