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Independent Development Trust 2013/14 Annual Report Presentation to the Portfolio Committee on Public Works 28 October 2014. Presentation Overview. Contextual Background Performance Highlights Governance Human Resource Management Financial Information Conclusion.
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Independent Development Trust2013/14 Annual Report Presentation to the Portfolio Committee on Public Works 28 October 2014
Presentation Overview • Contextual Background • Performance Highlights • Governance • Human Resource Management • Financial Information • Conclusion
Background • The financial year ended 31 March 2014 has been a particularly challenging year for the IDT. Despite continuing growth in the programme portfolio and an increase in the management fees charged, the financial sustainability issue remains unresolved. • Programmes to the value of R 6,6 billion were delivered, representing a 16% increase over the 2012/13 financial year which has been achieved with little increase in human resources. • Total operating costs, before Other Losses, have decreased from the previous year to R 363 million, that is by 3.1%%. • IDT achieved an efficiency ratio of 5,5%, i.e. costs R 5.50 to deliver R100 worth of programme expenditure. • The issuing of the National Treasury Instruction Note on the management fees charged by the IDT to client departments will assist the organisation in generating revenue to enable it to become substantially self-sufficient in the short- to medium-term.
Strategic Overview • PRIMARY PURPOSE: IDT is a development agency mandated to support government with the implementation of its programmes. The Trust is mandated “to use its resources together with strategic partners, in ways which … will best serve to enable poor communities in the Republic of South Africa to access resources and recognise and unlock their own potential, so as to continuously improve their quality of life”. • VISION: A leading public sector programme management agency. • MISSION STATEMENT: The IDT manages and delivers integrated social infrastructure programmes on behalf of government. • As a State-owned Entity within the DPW family, the work of the IDT speaks directly to the mandate of the Department of Public Works.
Corporate Positioning and Projected Impact • STRATEGIC POSITIONING: IDT poised to be “the leading public sector programme management agency.” To this end, the IDT • will continue to add value to the national development agenda by aligning to and contributing directly to the DPW mandate; • is set to deliver programmes in excess of R6 billion in 2014/15 with around 90 per cent delivering social infrastructure; • will advance the Public Works’ niche in social infrastructure delivery. • IMPACT STATEMENT: The IDT is on the ground, directly and positively impacting the lives of the citizens through timely and cost-effective delivery of social infrastructure and social development programmes that are aligned to government’s priorities and development aspirations of communities.
2013/14 Strategic Thrust: National Focus • Informed by its Mandate, the IDT strived to advance and contribute towards 7 specific national strategic outcomes:
Overview of Performance • ACHIEVEMENTS: 20 out of 22 corporate targets (91%) were delivered on target or exceeded. • UNDER-ACHIEVEMENTS: 2 targets (i.e. 9%) were under-achieved. Client budget deficits, delays in programmes commencement, and internal capacity shortfalls contributed to under-achievements. • HIGH LEVEL PERFROMANCE SUMMARY:
Impact of IDT’s Work: Community Facilities & Integrated Service Delivery
Governance Structures: Board & Board Committees • The IDT has a unitary Board of Trustees all of whom are non-executive and independent. • The responsibilities and fiduciary duties of the Accounting Authority are discharged through the Board. • The roles of the Board Chairperson and Chief Executive Officer are separate. • The Board Charter details the responsibilities of the Board which are undertaken through the following Sub-committees: • Audit and Risk Committee • Finance Committee • Strategic Planning and Programme Committee • Human Resources and Corporate Services Committee • Board EXCO (which also serves as the Remuneration Committee)
Synopsis of Key Board Agenda Issues • Contributing to the development of the IDT Business Case. • Providing leadership towards interim and long-term financial sustainability of the Organisation. • Ensuring effective governance and compliance, inter-alia, development and review of policies and governance frameworks. • Initiation of a recruitment process for a new CEO and ensuring a smooth leadership transition. • Securing operational stability of the organisation through: • providing parameters for recruitment of new staff and extension of contracts of critical staff. • enhancements of business processes, systems and approaches to ensure programme management efficiency.
Audit Report: Year ended 31.03.2014 • Audit Outcome: After 11 successive unqualified audits, the IDT received a qualified financial audit report in the 2013/14 FY, with unqualified outcome relating to performance information. • Reasons for the Financial Audit Qualification: The IDT received a qualified financial report on three issues: • Other income: Tender deposit income of R 5,8 million which the AGSA could not confirm by alternative means; • Leave pay accrual: The leave pay accrual of R 14,3 million could not be adequately verified by the AGSA from the employee leave records; • Funds due from programme principals: The AGSA was unable to determine whether any adjustment was necessary due to gaps in records resulting from the Systems upgrade.
Audit Action Plan • The Audit Action Plan has been prepared and approved by the Audit and Risk Committee to address the issues raised by the Auditor-General. • Systems and procedures will be enhanced where necessary to mitigate against recurrences of the matters identified in the audit. • An Internal Control Dashboard is prepared quarterly for review by the Audit and Risk Committee.
Going Concern and Funding • The going concern principle is the assumption that an organisation will remain in business for the foreseeable future. The measurement is usually for a rolling period of twelve months. • This implies that the entity will not be forced to halt its operations and liquidate its assets within this time frame. • The IDT has, in the past, been able to rely on the investment fund to fund its operations. • With the fund, the organisation now must: • Rely on a funding allocation from Treasury, either wholly or partly for support; and/or • Generate sufficient management fees from clients to fund the operating expenditure.
Cost Containment overview • The cost containment strategy seeks to balance the increasing demand for the IDT’s services and the resources required to meet that demand with the need to control and limit cost increases. • Whilst the Efficiency ratios exceed the targets set, there is the real risk that quality is being compromised and resources are being stretched to the limit; • There is a need for the IDT to control those elements which it can influence, namely • programme portfolio size and quality; • cost of resources; and • management fees recovered
Management Fees for the financial year • Management fees for the financial year ended 31 March 2014 amounted to R 402,8 million • A 113% increase compared with the total of R 188,9 million raised in the 2013/14 financial year. • Based on the programme expenditure for the year, management fees billed averaged 6,1%, a marked increase from the 3,3% average rate achieved in the previous year.
Programme expenditure analysis • The IDT’s programme expenditure grew significantly over the five years, that is 2009/10 to 2013/14: • Financial year Value Increase • 2009/10 R 1,6 billion - • 2010/11 R 2,3 billion + 43% • 2011/12 R 4,2 billion + 83% • 2012/13 R 5,6 billion + 33% • 2013/14 R 6,6 billion + 18%
2013/14 Financial Performance Financial Year 2013/14: Revenue : Actuals v Budget
