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2 May 2006Acting CFO

Sandra Gomm

NCOP

Select Committee on Security and Constitutional

Affairs

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AGENDA

• 2004/05 ANNUAL REPORT OVERVIEW

• 2005/06 BUDGET & EXPENDITURE OVERVIEW

• 2005/06 AUDIT MATTERS

• MTEF ALLOCATIONS

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2004/05 ANNUAL REPORT

OVERVIEW

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2004/05 ANNUAL REPORT OVERVIEW

Final Appr Actual expVariance

R’000 R’000R’000

DOJ & CD R 5 054 418 R5 005 643 R 48 775

Statutory* R 177 083 R 242 093 (R 65 010)

Total R 5 231 501 R5 247 736 (R 16 235)

* Judges Remuneration and Allowances

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2004/05 ANNUAL REPORT OVERVIEW

Programme Final Appr Actual Variance

(after exp

virement)

R’000 R’000 R’000

1. Administration R 579 420 R 579 419 R 1

2. Court Services R 2 291 164 R 2 274 216 R 16 948

3. State Legal Services R 222 684 R 222 684 R 0

4. NPA R 1 202 260 R 1 170 435 R 31 825

5. Auxiliary Services R 758 890 R 758 889 R 1

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2004/05 ANNUAL REPORT OVERVIEWEconomic Final Appr Actual exp Varianceclassification (after

virement)R’000 R’000 R’000

CURRENT

Compensation ofEmployees R 2 727 532 R 2 727 532 R 0

Goods & Services R 1 142 765 R 1 110 940 R 31 825

Financial Transactionsin Assets & Liabilities R 92 504 R 92 335 R 169

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2004/05 ANNUAL REPORT OVERVIEWEconomic Final Appr Actual Variance

classification (after virement)

R’000 R’000 R’000

TRANSFERS & SUBSIDIES

Prov & Municipalities R 8 480 R 8 480 R 0

Dept agencies &Accounts R 606 837 R 606 836 R 1

Foreign gov & internOrganisations R 162 R 162 R 0

Households R 12 550 R 12 550 R 0

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2004/05 ANNUAL REPORT OVERVIEWEconomic Final Appr Actual Varianceclassification (after

virement)

R’000 R’000 R’000

PAYMENT ON CAPITAL ASSETS

Buildings & other fixedStructures R 270 483 R 270 483 R 0

Machinery & Equipment R 183 392 R 166 612 R 16 780

Software & other Intangible assetsR 9 713 R 9 713 R 0

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2004/05 ANNUAL REPORT OVERVIEWDOJ & CD

Unqualified audit report

Emphasis of Matter• Asset management• Suspense accounts

(Agency services)• Contingent Liability –

Monies in Trust• Human Resource

Management• Inability to confirm

compliance with TR 8.2.3

NPA

Unqualified audit report

Emphasis of Matter• Asset management• Debt management• Accountability and

Governance status • Internal Audit• Policies not approved• Annual financial

statements for CARA submitted late

• Donor funds

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2005/06

BUDGET &

EXPENDITURE OVERVIEW

NOTE: UNAUDITED/PRELIMINARY

INFORMATION

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2005/06 – Financial Performance

• R 309 million – Year to date underspending (26 April 2006)

• R 289 million – Roll-over request to NT

• R 20 million – Surplus to be surrendered (0.37% of Departmental Budget)

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• R120 million anticipated underspending as at 7 Feb 2006

• Reduced to R 20 million, as at 26 April 2006, due to the finalisation of projects resulting in increased commitments (Roll-overs)

2005/06 – Financial Performance

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2005/06 Budget & Expenditure OverviewUPP's (Red) Stacked upon Budget Allocations (Blue)

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

2005/06 2004/05 2003/04 2002/03

Years

R'0

00

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2005/06 Budget & Expenditure Overview• Budget allocations (Blue) include

marginally funded projects• UPP’s (Red) – Unfunded Priority Projects

– Registered MTEF process– Updated regularly– Changes as costing information becomes firm

(Process of estimation & investigation before costing becomes final)

– Dynamic process

• Underspending due to various reasons• Process of Reprioritisation – moving

projects and budgets out of blue and move projects and expenditure from red to blue

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2005/06 Budget & Expenditure OverviewDoJ&CD - Monthly Expenditure Trend

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1 2 3 4 5 6 7 8 9 10 11 12

Months

R'0

00 2005/06

2004/05

2003/04

2002/03

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2005/06 Budget & Expenditure Overview• High expenditure in last quarter of

financial year due to – – Capital Works payments (DPW)– Payments for software licenses– Government Garage payments– Computer Hardware (DNS)– Payments for Professional Service

Providers– Authorised write-offs

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2005/06 Budget & Expenditure Overview

ProgrammeAdjusted Estimates

Expenditure VariancePercentage

Expenditure

R Thousand

Administration 389,279 370,097 19,182 95.07%

Court Services 2,289,577 1,948,405 341,172 85.10%

State Legal Services 313,824 299,590 14,234 95.46%

National Prosecuting Authority 1,354,810 1,398,187 -43,377 103.20%

Auxiliary and Associated Services 838,243 860,607 -22,364 102.67%

Sub Total 5,185,733 4,876,886 308,847 94.04%

Judges & Magistrates Salaries 849,977 1,040,097 -190,120 122.37%

TOTAL 6,035,710 5,916,983 118,727 98.03%

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2005/06 Budget & Expenditure Overview

Economic classification Adjusted Estimates

Final Expenditure

VariancePercentage Expenditure

Compensation of employees 2,403,989.00 2,226,667.00 177,322.00 92.6%

Goods and services 1,613,707.00 1,384,592.00 229,115.00 85.8%

Financial trans in assets and liab - 39,798.00 (39,798.00)

Departmental agencies and accounts 685,407.00 703,812.00 (18,405.00) 102.7%

Provinces and Municipalities 7,784.00 10,482.00 (2,698.00) 134.7%

Foreign govts and internat organ 3,942.00 4,107.00 (165.00) 104.2%

Households - 42,567.00 (42,567.00)

Machinery and Equipment 151,135.00 158,097.00 (6,962.00) 104.6%

Buildings and other fixed structures 317,975.00 306,312.00 11,663.00 96.3%

Software and other intangible assets 1,794.00 452.00 1,342.00 25.2%

Total 5,185,733.00 4,876,886.00 308,847.00 94.0%

R Thousand

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2005/06 Budget & Expenditure Overview

MAJOR REASONS FOR UNDERSPENDING

• Savings on personnel because of vacancies and staff turnover. The approval of the framework for court managers in September 2005 resulted in most court management position only being filled now;

• Magistrates salaries direct charge against Revenue Fund w.e.f. 1 April 2005;

• The Monies in Trust project – delays in the negotiation and final approval/s stages;

• Savings in operational cost because of delays in appointments;

• Infrastructure projects still in progress (Court building, maintenance and upgrading);

• Government and departmental priorities not yet finalised such as the finalisation of the Children’s Bill, the Child Justice Bill, the Sexual Offences Bill; and

• Delays in the procurement processes.

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2005/06 AUDIT MATTERS

• Matters potentially affecting the audit reports of the DOJ & CD and the NPA (as per interim management letters from AG)

– Asset management

– Debt management

– Accountability and Governance Status of the NPA

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2005/06 AUDIT MATTERS

• Monies in Trust– 2004/05: Qualified audit opinion

• Guardians Fund– 2002/03 & 2003/04: Disclaimer of audit opinions

and Publication and Tabling outstanding;– 2004/05: Audit in process

• President Fund – Unqualified audit opinion

• CARA – Unqualified audit opinion for period 1999 to 2005

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MTEF ALLOCATIONS

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MTEF Allocations 2005/06 – 2008/09

ProgrammeRevised Estimate

R Thousand 2005/06 2006/07 2007/08 2008/09

Administration 389,279 761,679 848,747 920,701

Court Services 2,289,577 2,609,746 2,927,983 3,202,664

State Legal Services 313,824 376,354 421,731 478,613

National Prosecuting Authority 1,354,810 1,535,562 1,709,691 1,947,314

Auxiliary and Associated Services 838,243 986,539 1,045,118 1,138,910

Sub Total 5,185,733 6,269,880 6,953,270 7,688,202

Judges & Magistrates Salaries 849,977 1,042,665 1,114,547 1,182,789

TOTAL 6,035,710 7,312,545 8,067,817 8,870,991

Year on Year Growth 21.15% 10.33% 9.96%

Medium -term expenditure estimates

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Observations on 2006 ENE Allocations • Between 2002/03 and 2008/09, the department’s budget, including statutory amounts, is expected to increase at an average annual rate of 11,2 per cent, from R4,7 billion to R8,9 billion.

• The largest part of this increase goes towards increasing personnel capacity and providing services, hence the relatively large increases in the Court Services and National Prosecuting Authority programmes.

• The 2006 Budget sets out additional allocations of R495 million for 2006/07, R722 million for 2007/08 and R1,1 billion for 2008/09 mainly for spending on the policy priorities of improving access and increased capacity, but also for an increase in the statutory provision for judges’ and magistrates’ salaries.

• From April 2006, the department has taken responsibility for accommodation costs which were devolved from the Department of Public Works.  [R309,8 million in 2006/07, R344,9 million in 2007/08 and R369,4 million in 2008/09]

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• Over the MTEF, there is a relatively large increase in expenditure on the Lower Court subprogramme, which accounts, on average, for 70,5 per cent of this programme’s budget, from R1,5 billion in 2005/06 to R2,3 billion in 2008/09, an average annual rate of 15,8 per cent. This will go towards improving service delivery, integrating the management of cases and people through the justice chain, human resources development and filling vacancies.

• The increase in expenditure on the Capital Works subprogramme, from R268,1 million in 2006/07 to R308,3 million in 2008/09, is to fund the building of new courts and the rehabilitation of existing court infrastructure.

• Additional allocations of R34 million in 2006/07, R 61 million in 2007/08 and R92,9 million in 2008/09 are for improving access to the services of the Guardian’s Funds and for deceased and insolvent estate services.

Observations on 2006 ENE Allocations

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Regional Budget Allocation (Court Services)

2005/06 2006/07 Growth

KWAZULU NATAL 202,280,000 265,303,000 31.2%

EASTERN CAPE 229,260,000 282,785,000 23.3%GAUTENG 240,460,000 317,208,000 31.9%MPUMALANGA 71,810,000 98,883,000 37.7%LI MPOPO 128,010,000 160,890,000 25.7%WESTERN CAPE 122,200,000 163,512,000 33.8%FREE STATE 107,770,000 135,764,000 26.0%NORTHERN CAPE 38,200,000 61,331,000 60.6%NORTH WEST 85,790,000 121,064,000 41.1%

NATI ONAL OFFI CE 882,426,000 832,617,000 -5.6%

TOTAL BUDGET 2,108,206,000 2,439,357,000

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Transfer payments - Public Entities and Constitutional Institutions

Public Entities and Constitutional Institutions

Revised Estimate

R Thousand 2005/06 2006/07 2007/08 2008/09

South African Human Rights Commission 41,774 49,220 53,381 58,103

Commission on Gender Equality 26,469 37,757 38,145 41,193

Special Investigating Unit 43,851 55,582 63,111 76,297

Legal Aid Board 440,008 501,409 554,729 610,312

Public Protector 55,127 67,784 74,722 80,725

Total 607,229 711,752 784,088 866,630

Year on Year Growth 17.21% 10.16% 10.53%

Medium -term expenditure estimates

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Transfer payments - Public Entities and Constitutional Institutions

Within the additional amounts allocated in the

2006 Budget, R75 million, R79 million, and

R129 million have been provided for each of the

2006 MTEF years to –

• increase human resources capacity in the Legal Aid Board;

• increase legal representation for children;

• increase capacity in the office of the Public Protector, the Special Investigating Unit,

the Commission on Gender Equality and the South African Human Rights Commission.

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Allocations to National Prosecuting Authority

NPARevised Estimate

R Thousand 2005/06 2006/07 2007/08 2008/09

Public Prosecutions 944,350 1,069,475 1,210,099 1,368,754

W itness Protection Programme 45,899 59,271 64,435 88,171

Special Operations 364,561 406,816 435,157 490,389

Total 1,354,810 1,535,562 1,709,691 1,947,314

Medium -term expenditure estimates

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Allocations to National Prosecuting Authority

Within the additional amounts allocated in the

2006 Budget, R145 million, R232 million,

and R384,8 million have been provided for each of

the 2006 MTEF years to facilitate: – the rollout of specialised courts;

– the appointment of additional prosecutors;

– implementation of job evaluation results in the National Prosecuting Authority;

– special projects on organised crime syndicates and cyber crime, and

– enhancing capacity in the asset forfeiture and witness protection units.

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THANK YOU