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ANALYSIS OF THE DEPARTMENT OF DEFENCE ANNUAL REPORT FOR 2013/14

ANALYSIS OF THE DEPARTMENT OF DEFENCE ANNUAL REPORT FOR 2013/14. 15 October 2014. Wilhelm Janse van Rensburg Researcher: JSC on Defence wjansevanrensburg@parliament.gov.za 021 403 8276. 1. DOD 2013/14 Annual Report Strategic Outcomes and Outputs. 2. Strategic Outcomes and Outputs

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ANALYSIS OF THE DEPARTMENT OF DEFENCE ANNUAL REPORT FOR 2013/14

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  1. ANALYSIS OF THE DEPARTMENT OF DEFENCE ANNUAL REPORT FOR 2013/14 15 October 2014 Wilhelm Janse van Rensburg Researcher: JSC on Defence wjansevanrensburg@parliament.gov.za 021 403 8276 1

  2. DOD 2013/14 Annual Report Strategic Outcomes and Outputs 2

  3. Strategic Outcomes and Outputs DOD 2013/14 Annual Report The DODMV’s strategic outputs is aligned to the MTSF priorities of the Government. The majority of these were achieved: p.2 • Key concerns: • Only 17 of the planned 25 number of incidents of corruption and fraud reported for detection were achieved. • Serviceability of equipment for external operations was only at 77%.

  4. Strategic Priorities of the Minister DOD 2013/14 Annual Report The MoD identified eight strategic priorities for 2013/14. Most were achieved, but a number of concerns remain. p.3 • Key concerns: • Enhancement of Landward Defence. A Prime-mission Equipment and Technology Support Plan was drafted. • Revitalising the Reserves. There has been slow-down in the recruitment of reserves. • The Defence Works Capability. Although functional, capacity building is still under way, only 1 383 of 2 517 funded posts filled.

  5. SANDF Selected Performance Indicators DOD 2013/14 Annual Report A number of additional Main Performance Indicators for the SANDF is listed. Several of these were under achieved: p.5

  6. DOD 2013/14 Annual Report Programme and sub-programme performance evaluation 6

  7. Performance evaluation: An overview DOD 2013/14 Annual Report p.7 An overview of all eight programmes • Key concerns: • Percentage of budget spent versus percentage of targets achieved. • Dramatic reduction in the number of targets compared to 2012/13. • The number of classified targets

  8. Performance evaluation: Programme 1 DOD 2013/14 Annual Report p.8 • Notes: • Quarterly spending was in line with general targets. • The number of targets decreased from 106 in 2012/13 to 88 in 2013/14.

  9. Performance evaluation: Programme 1 DOD 2013/14 Annual Report p.10 Selected under-achieved targets in Programme 1. p.12 p.12 p.13 p.15 p.16

  10. Performance evaluation: Programme 2 DOD 2013/14 Annual Report p.16 • Notes: • Low spending on the Defence capability management (41.7 per cent) and Support to the people (53.0 per cent) sub-programmes by the end of Q3. • One of only two programmes to show an increase in targets set. • Key concerns: • The cancellation of four International Military Exercises (Three of which were also cancelled in 2012/13). • The deployment of SA Navy personnel for Naval Control and Guidance of Shipping training to other SADC countries. • The alternative utilisation of re-allocation funding.

  11. Performance evaluation: Programme 3 DOD 2013/14 Annual Report p.17 • Notes: • Quarterly spending on track with planned targets and only a limited virement • Key concerns: • Reduction in targets from 23 in 2012/13 to 4 in 2013/14.

  12. Performance evaluation: Programme 4 DOD 2013/14 Annual Report p.18 • Notes: • Slow spending throughout the year (67.8 % by Q3). Large virement of R317m made to Programme 4 during Q4. Thus, R2.125 billion (or 35.23 per cent) of the final allocation was spent in the last quarter alone. • Key concerns: • High spending in the last quarter. • High spending, but low achievement on flying hours. • Reduction in targets from 14 in 2012/13 to 4 in 2013/14.

  13. Performance evaluation: Programme 5 DOD 2013/14 Annual Report p.20 • Notes: • Slow spending throughout the year (67.7 % by Q3). Large virement of R145m made to Programme 5 during Q4. Thus, R1.089 billion (or 33.48 per cent) of the final allocation was spent in the last quarter alone. • Key concerns: • High spending in the last quarter. • High spending, but low achievement on hours at sea • Reduction in targets from 14 in 2012/13 to 4 in 2013/14.

  14. Performance evaluation: Programme 6 DOD 2013/14 Annual Report p.21 • Notes: • Spending slightly lower than planned throughout the year. Virement in Q4 may have contributed to overspending by the end of the financial year. • Key concerns: • Slight overspending on budget. • Reduction in targets from 15 in 2012/13 to 6 in 2013/14. • Outsourcing to private medical facilities. • Patient footprint misaligned with the health care facilities

  15. Performance evaluation: Programme 7 DOD 2013/14 Annual Report p.22 • Notes: • Slow spending throughout the year (66.6 % by Q3). Large virement of R6.7m made to Programme 7 during Q4. Thus, R270m (or 34.86 per cent) of the final allocation was spent in the last quarter alone. • Increase in the number of performance targets. • Key concerns: • High spending in the last quarter. • Decrease in the target for vetting decisions from 7000 in 2012/13 to 4000 in 2013/14.

  16. Performance evaluation: Programme 8 DOD 2013/14 Annual Report p.23 • Notes: • Spending throughout the year in line with planning. • Large virement away from the programme in Q4. • Key concerns: • Reasons for the large virement away from the programme in Q4? • The number of learners on courses. • Low number of crime prevention operations by the Military Police. • Reduction in targets from 38 in 2012/13 to 17 in 2013/14.

  17. DOD 2013/14 Annual Report Organisational Structure and Human Resources 17

  18. Human resources DOD 2013/14 Annual Report p.26 Employment and vacancies by critical occupation • Key concerns: • Low retention of core skills. • Low rate of appointment of engineers and aircrew.

  19. Human resources DOD 2013/14 Annual Report p.25 Macro-Personnel Strength for 2011/12, 2012/13 and 2013/14 • Notes: • Personnel costs represents 53% of the DOD’s total expenditure. • Sick leave came at a cost of R263m to the DOD. Highest level of sick-leave utilisation is at the Lower Skilled salary band. • In terms of labour relations, no strikes by PSAP members were recorded. 137 cases of misconduct were finalised. 139 grievances were finalised while 644 remain unresolved.

  20. DOD 2013/14 Annual Report Financial statements 20

  21. Financial Statements DOD 2013/14 Annual Report Budget allocation for 2013/14 p.27 Additional funding: R60.872 million: To Programme 4 (Air Defence) for higher than budgeted personnel cost. R41.873 million: Paid to Programme 3 (Landward Defence) from sales of equipment and spares through the Special Defence Account. R6.830 million: Paid to Programme 4 (Air Defence) from sales of equipment and spares through the Special Defence Account. R1.654: Paid to Programme 8 (General Support) from sales of equipment and spares through the Special Defence Account.

  22. Financial Statements DOD 2013/14 Annual Report Irregular expenditure p.29 Fruitless and wasteful expenditure: Increased from R9.531 million in 2012/13 to R307.497 million in 2013/14. This is, however, mostly due to a penalty of R303.347 million incurred for the cancellation of an unspecified contract. Other cases of fruitless expenditure include R141 000 Interest Charged, R24 000 of state funds utilised for private use, R21 000 forfeited funds, R13 000 storage charges for recover vehicle and R10 000 for other cases. • Key concerns: • Additional funds for Air Defence personnel remuneration. • ‘Sale of goods and services other than capital assets’ remain unclear. • Fruitless expenditure due to cancellation of a contract. • Funds spent without PPPFA compliance.

  23. DOD 2013/14 Annual Report Auditor-General Report 23

  24. Auditor-General Report DOD 2013/14 Annual Report The DOD received a Qualified Audit p.30 • Reasons: • Intangible capital assets: The AGSA was unable to obtain sufficient audit evidence for intangible assets. • Correction of errors from 2012/13: The 2013/14 financial statements provided corrections for errors made in the previous financial year with regards to the disclosure of intangible capital assets. The AGSA could not substantiate these corrections with supporting evidence. Additional matters of emphasis: Internal Audit: A fully functional internal audit committee was not in place. Financial statements: Financial statements were not prepared according to the PFMA. Expenditure management: No effective steps taken to prevent irregular expenditure. Leadership: The DOD did not exercise sufficient oversight responsibility regarding financial reporting over capital assets. Financial and performance management: Existing manual and automated controls were not designed to ensure adequate record keeping. Governance: The DOD is still in the process of capacitating the internal audit component.

  25. Thank you ~ Questions Wilhelm Janse van Rensburg Researcher: JSC on Defence wjansevanrensburg@parliament.gov.za 021 403 8276 25

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