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VOTE : 22 Defence and Military Veterans. Annual Audited Financial Statements For the year ended 31 March 2012. Scope. Purpose of the presentation Breakdown of Appropriation Revenue Composition of expenditure by programme Appropriation statement per programme
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VOTE : 22Defence and Military Veterans Annual Audited Financial Statements For the year ended 31 March 2012
Scope Purpose of the presentation Breakdown of Appropriation Revenue Composition of expenditure by programme Appropriation statement per programme Appropriation statement per SCOA Statement of Financial Performance and analysis of changes Statement of Financial Position and analysis of changes Statement of changes in Net Assets Cash Flow Statement Departmental revenue Expenditure on compensation of employees Expenditure on goods and services Payments for financial assets Debtors Irregular Expenditure Assets Auditor General’s Report – GDA SDA 2010/11 & 2011/12 Auditor General’s Report – SDA
Purpose The purpose of the presentation is to present Defence’s 2011/12 Annual Financial Statements and the Report of the Auditor General on this statements to the Portfolio Committee for Defence for the year ended 31 March 2012.
Analysis of Changes Increase in programme Administration due to the increase in the devolved funds from NDPW and salary increases together with the implementation of the new defence force remuneration systems. Increase in programme Landward Defence due to the maintenance of the current defence capabilities. Increase in programme Air Defence mainly due to the maintenance of the current defence capabilities. Increase in programme Maritime Defence due to the maintenance of the current defence capabilities. Increase in programme Military Health Support due the maintenance of the current defence capabilities.
Analysis of Changes Increase in programme Defence Intelligence due to the implementation of the new defence force remuneration systems. Increase in programme General Support due to the implementation of the new defence force remuneration systems. Increase in programme Force employment due to the strengthening and consolidation of border safeguarding as well as sustaining peace missions as per Cabinet decision.
Analysis of Changes Increase in Compensation of employees due to improvements in conditions of service for soldiers and Military skills development initiative. Increase in Goods and Services due to higher expenditure on Advertising, Entertainment (Military Attaches), Audit costs (Forensic and SDA - 2 years), Property payments, Venues and facilities and other operating expenditure (Aircraft chartering). Decrease in transfers and subsidies to households due to the decrease in the number of officials exiting the department through EISP and MEM. Increase in transfers and subsidies to departmental agencies and accounts due to SDA allocation. Increase in transfers and subsidies to public corporations and private enterprises due to additional transfer made for the Navy Dockyard.
Analysis of Changes Increase in transfers and subsidies to non-profit institutions due to yearly adjustments. Increase in buildings and other fixed structures due to the upgrading of the runway at AFB Waterkloof. Increase in machinery and equipment due to acquisition of UHF tactical equipment, warrior shelters systems and ambulances for the presidential Military Unit. Decrease in Specialised Military Assets due to the reclassification of capital assets expenditure to inventory. Increase in payment for financial assets due to unauthorised expenditure written-off.
Analysis of Changes Increase in departmental revenue due to the deposit refund in cancellation of the A400 contract. Increase in expenditure on Compensation of employees due to annual salary increases. Increase in Transfers and Subsides mainly due to the increase in SDA allocation. Increase in expenditure on Tangible capital assets due to the upgrading of the runway at AFB Waterkloof. Decrease in expenditure on Software and other intangible assets due to upgrade done in 2010/11 FY.
Analysis of Changes Increase in cash and cash equivalents due to the increased need for cash in operational areas as well as inflation. Increase in prepayments and advances due to backlog in S&T advances in international operations. Decrease in receivables due to Unauthorised expenditure written off (Positive). Increase in Voted funds to be surrendered due to under spending largely in Military Veterans environment. Decrease in bank overdraft also due to Unauthorised Expenditure written off which was financed by the bank overdraft (Positive). Increase in Payables due to invoices received at year end which could not be paid on time
Analysis of Changes Increase of goods and services other than capital assets due to increase in receipts for board and lodging and housing rent. Decrease in fines, penalties and forfeits due to the Garnishee orders receipts not being recognised as revenue. Increase in sales of capital assets due to more obsolete and redundant assets sold. Increase in financial assets and liabilities due to forex gain in the cancellation of A400 transaction. Increase in transfers received due to more funds received from the United Nations for participation in Peace Support Operations.
Analysis of Changes Increase in basic salary due to annual increases and the new remuneration system. Decrease in performance awards due to new system being implemented which resulted in no bonuses paid. Increase in other categories related to the new Military Salary Dispensation and the general salary increase.
Analysis of Changes Decrease in administrative fees due to large amounts paid to travel agencies for the 2010 FIFA World Cup in the previous year. Increase in advertising due to an approved advertising campaign including billboards and other media. Increase in entertainment expenditure is due to increased diplomatic ties with foreign countries. Increase in audit cost due to forensic audits and SDA audit for two financial years.
Analysis of Changes Increase in property payments due to increase in municipal taxes, rental and electricity. Increase in venues and facilities due to increased number of seminars and symposia held. Increase in other operating expenditure mainly due to aircraft chartering.
Analysis of Changes Other material losses written-off Decrease in expenditure on settlements due to substantive claims in previous year not repeated. Increase in expenditure on legal fees due to additional legal assistance utilised by the DOD. Write-off of unauthorised expenditure which occurred in previous financial years (Rm204,134).
Analysis of Changes Increase in claims recoverable is mainly due to debtor arose from the Provincial Government of KZN. Increase in staff debt mainly due to losses of state money and studies at state expense. Decrease in other debtors is mainly due to unauthorised expenditure written off included in debtors (Rm 204 134).
Audit Outcome Unqualified Report 39
Summary of the findings • Unqualified report • Emphasis of Matters • Financial Reporting Framework - Departure • Restatement of Corresponding Figures for Movable Tangible Capital Assets • Other Matters • Achievement of planned targets • Material Adjustments to Annual Performance report • Strategic planning and performance management • Human Resource Management and Compensation • Internal Audit • Annual Financial Statements, Performance and Annual report • Procurement and Contract Management 40
DOD AUDIT REPORT AND ACTION PLANS For the year ended 31 March 2012
Audit Outcome - Matters of Emphasis Emphasis of matters paragraphs are included in the auditor’s report in order to highlight them for the benefit of the users of the financial statements. There are 2 matters of emphasis in the report: 42
Audit Outcome - Matters of Emphasis continuation Financial Reporting Framework As disclosed in note 33 to the financial statements, the National Treasury has granted the department a departure from the Departmental Financial Reporting Framework. In terms of this departure, the department only has to disclose information for the categories of specialised military, transport and immovable assets and not the other categories of assets as required by National Treasury in the Departmental Financial Reporting Framework as set out in the accounting policy note. Restatement of corresponding figures The corresponding figures for movable tangible capital assets were adjusted in disclosure note 33 as current year adjustments to prior year balances. 43
AG findings and corrective action Emphasis of Matter Items 45
