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Presentation to the Portfolio Committee on Home Affairs

13 October 2010

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Annual Report and Financial Statements for the Financial Year ended 31 March 2010

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Vision and Mission

Vision • To strengthen constitutional democracy through the

delivery of free and fair elections in which every voter is able to record his or her informed choice

Mission• The Electoral Commission is an independent and

impartial permanent body created by the Constitution to promote and strengthen constitutional democracy in South Africa through the delivery of free and fair elections at all levels of government

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Legislative Mandate- In terms of Section 190 of the Constitution of the Republic of South

Africa (Act 108 of 1996), the Electoral Commission must

a. manage elections of national, provincial and municipal legislative bodies in accordance with national legislation

b. ensure that those elections are free and fair, andc. declare the results of those elections within a period that must be

prescribed by national legislation and that is as short as reasonably possible.

- The duties and functions of the Electoral Commission are defined in section 5 of the Electoral Commission Act, 1996. These include to

a. compile and maintain a voters' roll by means of a system of registering eligible voters by utilising data available from government sources and information furnished by voters

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Legislative Mandate (cont.)b. compile and maintain a register of parties

c. undertake and promote research into electoral matters

d. develop and promote the development of electoral expertise and technology in all spheres of government

e. continuously review electoral legislation and proposed electoral legislation, and to make recommendations in connection therewith

f. promote voter education

g. declare the results of elections for national, provincial and municipal legislative bodies within seven days after such elections, and

h. appoint appropriate public administrations in any sphere of government to conduct elections when necessary.

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Strategic Objectives1 Positioning the Commission as a global leader in

electoral democracy2 Developing strategy, monitoring project implementation

and facilitating independent assurance processes to ensure the effective and efficient functioning of the Commission

3 Maintaining systems and procedures which will ensure an accurate and up-to-date national voters’ roll

4 Implementing and promoting effective electoral processes that will facilitate the participation of political parties and candidates in the management and delivery of free and fair elections

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Strategic Objectives (cont.)

5 Delivering well-run elections which produce results that are credible

6 Educating and informing civil society with a view to optimizing citizen participation in democracy and electoral processes

7 Developing and maintaining effective business processes (in respect of legal services, human resources management, support services, financial management, and information and communication technology services) in order to ensure the effective functioning of the Commission

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Strategic objective 1: Positioning the Commission as a global leader in electoral democracy

• Managed elections of 99 other institutions. Exceeded target of 36 by 63.

• Participated in 6 technical assistance programmes. Exceeded target of 4.

• Observed elections in 4 countries. Achieved target.• Participated in 1 study tour to another country. Could

not achieve target due to increased number of technical assistance provided to 6 other countries.

• Hosted 12 international delegations

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Strategic objective 1 (cont.)

Target Performance result Reason for variance

Reviewing legislation and regulations at least once a year

1

At least four meetings of the FISB per year

1 Meetings not possible due to the 2009 NPE

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Strategic objective 2: Developing strategy, monitoring project implementation and facilitating independent assurance processes to ensure the effective and efficient functioning of the Commission

• Presented strategic plan to Portfolio Committee on Home Affairs

• Monthly and quarterly reports were submitted. The A-G found that quarterly reports did not track progress against targets in the approved strategic plan. This is being corrected.

• Audit Committee met 4 times• Risk Management Committee met regularly

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Strategic objective 2 (cont.)• The A-G found the Commission wanting in respect of

the following:– Strategic objectives are not SMART. This will be

corrected when Strategic Plan is compiled for 2011/12.

– Audit Committee did not consist of 3 members. This situation has since been corrected.

– Internal Audit did not complete planned work. This was due to preparations for elections.

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Strategic objective 3: Maintaining systems and procedures which will ensure an accurate and up-to-date national voters’ roll

Target Performance result Reason for variance

22.6 million registered voters on the voters’ roll

22 911 527 – target exceeded by more than 300 000

Voters’ roll checked against National Population Register monthly

Achieved

Strategic objective 3 (cont.): changes in the voters’ roll

1 April 2009 31 March 2010

Eastern Cape 3 054 367 3 013 141

Free State 1 387 497 1 364 798

Gauteng 5 460 054 5 493 346

KwaZulu-Natal 4 471 407 4 422 759

Limpopo 2 254 643 2 241 385

Mpumalanga 1 695 358 1 676 241

North West 1 656 399 1 541 263

Northern Cape 554 539 546 333

Western Cape 2 633 340 2 612 261

23 167 604 22 911 527

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Strategic objective 3 (cont.)• Targeted demographical populations where there were

registration shortfalls – as a result 84% new registrations were young people between ages of 18 and 29

Strategic objective 3 (cont.): Overall registration activity per age group

Age groups

New registrations

Re-registration same VD

Re-registration different VD

Total

16 – 17 7 657 339 261 8 257

18 – 19 6 965 1 335 1 176 9 476

20 – 29 10 085 6 275 9 238 25 598

30 – 39 1 851 5 932 8 476 16 259

40 – 49 1 253 5 296 5 197 11 746

50 – 59 810 3 713 3 103 7 626

> 60 713 4 048 2 791 7 552

29 334 26 938 30 242 86 514

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Strategic objective 3 (cont.)• 19 726 voting stations identified for 2009 National and

Provincial Elections• Of these, 18 608 were permanent, 1 061 were

temporary and 57 were mobile. Mobile voting stations reduced by 2%. Exceeded target by 0.3%.

• Of 18 608 permanent voting stations, 16% did not have electricity, 6% did not have ablution facilities and 10% did not have running water. Infrastructure task team met twice a year as planned with aim of improving infrastructure at voting stations.

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Strategic objective 4: Implementing and promoting effective electoral processes that will facilitate the participation of political parties and candidates in the management and delivery of free and fair elections

• 1 254 Party Liaison Committee meetings held at national, provincial and municipal spheres. Exceeded target of 494 meetings.

• 139 registered parties: 106 at national level and 33 at municipal level

• 6 new parties were registered and 36 parties were deregistered. Registration and deregistration of parties completed within legal timeframes.

Strategic objective 4 (cont.): ward by-elections

Province By-elections Number of VDs

Eastern Cape 27 149

Free State 17 91

Gauteng 13 52

KwaZulu-Natal 33 177

Mpumalanga 13 37

Limpopo 4 23

Northern Cape 6 27

North West 2 12

Western Cape 24 93

139 661

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Strategic objective 4 (cont.) • 139 ward by-elections were held within 90 days

prescribed period – decrease of 14% since 2008/09• Main reasons for ward candidate vacancies: deaths

(46), resignations (44) and expulsion (28)• 365 PR vacancies were filled within prescribed 35 days• Main reasons for PR vacancies in local councils:

resignations (218), expulsion (65), deaths (43)• Main reasons for PR vacancies in district councils:

resignations (22), expulsion (5), deaths (2)

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Strategic objective 5: Delivering well-run elections which produce results that are credible

• All local office infrastructure functional and secured in terms of municipal agreements or Commission’s procurement processes. Target achieved.

• All necessary electoral material, including voters’ rolls, ballot papers and security material, for use in 2009 elections were procured and distributed in time. 100% achievement of target.

• 100% availability of warehouses at national and provincial spheres

Strategic objective 5 (cont.):• 2009 National and Provincial Elections were held on 22

April 2009• Special voting took place on 15 April 2009 (outside the

Republic) and on 20 and 21 April 2009 (inside the Republic)

• Voter turnout of 77.3% exceeded the target of 65%

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Strategic objective 5 (cont.)• Measures to enhance transparency of elections

processes included– Auditing of results system– Auditing of results– Scanning of results slips

• 2009 elections results declared within 3 days. Target exceeded by 4 days.

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Strategic objective 6: Educating and informing civil society with a view to optimizing citizen participation in democracy and electoral processes

• 1 330 226 civic education interventions. Exceeded target of 246 170 interventions.

• Civic education initiatives contributed to enthusiastic participation by voters– Collaboration with various partners and stakeholders– Education materials, including Voter Education

illustrated booklet– Democracy TV drama– Outside broadcasts

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Strategic objective 6 (cont.)

Target Performance result Reason for variance

10 campaigns conducted per province and 4 campaigns conducted nationally (94)

94 campaigns

6 stakeholder engagements per province (54)

36 stakeholder engagements

Time and capacity constraints

Strategic objective 6 (cont.): Summary of interventions

Province Target Reached Difference % Difference

Eastern Cape

37 359 543 702 506 343 1 355.34%

Free State 15 678 35 137 19 459 124.12%

Gauteng 31 834 118 862 87 028 273.38%

KwaZulu-Natal

42 900 66 269 23 369 54.47%

Limpopo 37 243 69 027 31 784 85.34%

Mpumalanga 15 546 131 906 116 360 748.49%

North West 21 566 39 970 18 404 85.34%

Northern Cape

22 189 22 727 538 2.42%

Western Cape

22 507 302 626 280 119 1 244.59%

246 822 1 330 226 1 083 404 438.94%

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Strategic objective 6 (cont.)• Voter Satisfaction Survey was conducted on Election

Day– 54% of voters found political parties to be tolerant

during election campaigns and 21% somewhat tolerant

– 64% of voters took up to 15 minutes to get to voting stations while 22% took between 16 and 30 minutes

– 96% of voters reported that no-one at all tried to force them to vote for a certain political party

– 73% of voters were very satisfied with level of Commission’s service and 24% were satisfied

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Strategic objective 6 (cont.)• Time and capacity constraints resulted in some targets

not being achieved– 3 new publications not developed– Target of 2 research projects not achieved. 1

research project, viz. “Exit Poll” conducted– Publication of occasional papers deferred to 2012

financial year– Library review deferred to 2012– Feasibility study for museum deferred to 2013

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Strategic objective 6 (cont.)• Hosted 6 media briefings, issued 45 media releases,

held one national media workshop and conducted more than 100 interviews

• Established an efficient public call centre with a dropped call rate of 4.6%

• Successful programmes and events included:– Women’s month celebrations– Youth Ambassador Programme

• 2 000 copies of Annual Report and 3 000 copies of the Elections Report were printed and distributed

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Strategic objective 6 (cont.)• Media campaign included:

– 2 radio adverts, produced in all 11 official languages– 555 billboards– 1 TV commercial

• Utilised SABC TV, radio, e.tv, community TV, commercial radio, community radio and print media

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Strategic objective 7:Developing and maintaining effective business processes (in respect of legal services, human resources management, support services, financial management, and information and communication technology services) in order to ensure the effective functioning of the Commission

• Produced Election Legislation Pocketbooks containing all the prescripts relating to the Electoral Commission

• Published 16 election notices relating to the 2009 National and Provincial Elections

• Involved in 12 legal cases. 11 involved vacancies and replacement of municipal councillors

• 323 contracts and lease agreements were concluded

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Strategic objective 7 (cont.)• Human resources management

– 806 posts; 94 vacancies on 31 March 2010. 57% of the planned 170 posts were filled. Exceeded target of 50%.

– Commitment to ensuring compliance with Employment Equity Act and the numerical goals set out in the EE five-year plan

– Staff turnover was 2.9%– Disciplinary action taken against 17 employees for

reasons of financial misconduct, misconduct or fraud– 12 matters were referred to the CCMA

Strategic objective 7 (cont.) Average sick leave days by rank

Rank 2008/2009 2009/2010

Senior Manager 3.53 1.91

Manager 1.44 2.46

Deputy Manager 2.60 3.07

Assistant Manager 4.86 2.82

Senior Administrative Officer

2.56 3.38

Administrative Officer 2.24 2.38

Assistant Administrative Officer

2.47 3.11

Administration Clerk 4.00 1.50

Messenger / Cleaner 4.44 2.61

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Strategic objective 7 (cont.): Employee deaths

Year Number of deaths Average age of deceased

2007/08 1 42

2008/09 5 40.8

2009/10 3 43.6

Strategic objective 7 (cont): Recruitment, promotions and resignations

Recruited Promoted Resigned

DCEO / Senior Manager

0 0 0

Manager 0 2 0

Deputy Manager 1 3 1

AM 5 3 2

Senior Administrative Officer

3 7 3

AO 5 5 2

Assistant AO 82 0 13

Senior Administrative Clerk

1 1 0

Housekeeper / Driver

0 0 0

97 21 21

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Strategic objective 7 (cont.): Staff turnover due to resignationsYear Number of

resignationsPercentage

2007/08 11 1.8%

2008/09 10 1.6%

2009/10 21 2.9%

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Strategic objective 7 (cont.)• Training and skills development

– 17 training interventions were conducted at the Centre for Elections Learning

– 59 257 electoral staff members were trained for the 2009 National and Provincial Elections

– 118 bursary applications were approved– 8 interns were recruited

Strategic objective 7 (cont.): Employer-initiated training

Course / Learning activity Number of participants

Project Management 277

Labour Law 87

HR, Payroll and Training 34

Occupational Health and Safety 17

Accounts Payable 25

Employment Equity 21

Effective Business-writing 24

By-elections training 19

Technical Risk Management Awareness

23

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Strategic objective 7 (cont): Employer-initiated training (cont.)Course / Learning activity Number of participants

Financial management for non-financial managers

40

Induction session 15

Election material task team training

7

4x4 Training 23

Leadership development 14

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Strategic objective 7 (cont.)• Procurement and asset management

– Reviewed procurement policies and procedures to ensure alignment with Supply Chain Management requirements

– Implemented an electronic procurement system– Targeted BEE and SMME suppliers in order to strengthen the

Commission’s supplier database– Conducted stringent due diligence audits on companies under

consideration for contracts– Maintained an asset register– Reviewed asset policies, procedures and processes to ensure

compliance with the requirements of the PFMA, GRAP and IFRS

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Strategic objective 7 (cont.)• Procurement and asset management

– 646 contracts awarded to the value of R245.05 million

– Of these, 405 went to BEE companies (57.91% of total contract value)

– Non-SMMEs were awarded only 35.3% of the total value of contracts

• The A-G found that the Commission did not ensure that bids were advertised in at least the Government Tender Bulletin for a minimum period of 21 days. This has been corrected.

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Strategic objective 7 (cont.)• Primary focus of Information and Communication

Technology projects was to provide the necessary support during the 2009 Elections– 2009 Elections Results System– Enhancement of the Issue Tracker– Website capacity– Electoral Staff System Enhancements– Call Centre– GIS Support

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Strategic Objective 7:Finance Services

• Maintain financial reporting and internal control mechanisms by developing and maintaining standard operating procedures in SAP

• Liaise and cooperate with the Auditor-General (AG) and Internal Auditors in respect of the External and internal Audit

• Adhere to PFMA & Treasury regulations and internal policies and procedures

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Strategic objective 7 (cont)• Some targets not achieved due to lack of adequate

human resources capacity– Reconciliations not finalised by the 10th of each

month– Payments not made within the prescribed 30 day

period– Updating financial directives, policies and

procedures– Revising standard operating procedures

• The above is being addressed by the appointment of suitably qualified staff

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Report of the Auditor-General• A-G expressed a qualified audit opinion for the first time since 2001

Basis of a qualified Opinion• Administrative expenditure (Page 130, Note

22) - Operating lease expenses – R 39 464 538

The amount presented in the AFS represents the actual expenditure incurred in the current year and was correctly accounted for. The qualification is as a result of the exclusion of the future expenditure based on the lease term and escalations for the 235 MEO offices not taken into considerations as is required by the Accounting standard (GRAP13)

Corrective Action:An up-to-date register of lease agreements for national,

provincial and local levels is being developed to monitor all data relating to such agreements.

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Basis of a qualified Opinion (cont.):Subsistence & travelling - R 121 024 188

- The qualification is based on the amount of R114m paid to temporary electoral staff who worked on election day. From the audit sample the error found by the auditors is R 27 443 but the total expenditure was qualified.

– The payment of the 200 000+ electoral staff members that worked on election day during the 2009 national and provincial elections presented some verification problems.  Issues that, amongst others, arose were:

• Not all staff members turned up for work on election day. Where there was a need for replacement formal employment contracts were not entered into with all the replacement staff members.

• There were cases where some attending staff members did not sign attendance registers or where a formal employment contract for the day was not entered into or was subsequently mislaid in the process of having to be forwarded from the more than 19 000 voting stations to central storage points.

• There were a few cases where staff members that were recruited and trained for election day, as best can be established, did not report for duty but were nevertheless paid as their details were not deleted from the electronic register before the date of payment.

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Subsistence & travelling (continue…)

• For audit purposes all expenditure had to be verified by documentary evidence. Staff are allocated to voting stations in terms of a set formula that take voter numbers and facilities into account and that in no instance were more persons paid than was supposed to be the case. Tariffs were predetermined in the electronic financial system of the IEC and that all those who were paid, were paid the correct tariffs.

Corrective action:• To eliminate these issues for the coming elections the Electoral

Commission will concentrate all its efforts to deal with those challenges as best possible.

• The electoral staff recruitment and payment plans are being reviewed.

• The possibility of using the registration diary more effectively in place of attendance registers is being investigated

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Audit ReportBasis of a qualified Opinion;• Commitments (Disclosure Note) – R236 835 908 (Page 131

Note 25)This a item that is disclosed as required by the accounting standard and does not have an effect on the actual expenditure incurred in the current financial year.The contract commitments disclosed in the AFS are contracts that the commission has either a legal or contractive obligation to make payments in future and were available for audit. The estimated future payments included all the contracts of Commission and not only those that were legal commitments.

Corrective action:• An up-to-date register is being maintained to assess the nature,

extent and value of contractual commitments on a quarterly basis

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Audit Report• All funds expended by the Commission had been

accounted for• There were no misdemeanours involved in any way as

far as the basis for qualification is concerned

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Accounting Policy

• The Annual financial statements have been prepared in accordance with effective Standards of Generally Recognised Accounting Practice (GRAP) including any interpretations, guidelines and directives issued by the Accounting standard Board.

• Financial statements have been prepared on the historical cost basis.

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Revenue

• The Commission received R 937 233 000 from The Department of Home Affairs;

• Other revenue consisting largely of investment income of R 20 030 445 and sponsorship income of R 4 250 000;

• All the funds have been accounted for and disclosed in the financial statements.

• Page 112 of the Annual report

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Actual Expenditure vs BudgetSummary : Economic Classification Report for the year ended 31 March 2010

EXPENDITURE: Standard Items Budget (Including

Adjustments Estimate)

R’000

Total Expenditure 2009/2010

R’000

Variance – Saving / (over-expenditure)

R’000

Variance –

%

Personnel Expenditure 308 782 292 978 16 311 5

Administrative Expenditure 264 217 232 471 32 290 12

Stock 87 761 69 095 18 666 21

Equipment 13 807 19 501 5 694 41

Land & Buildings (Rental) 40 635 37 455 3 180 8

Professional & Special Services 311 485 244 046 67 439 22

Miscellaneous Expenses 65 133 (68) 1.05

Depreciation 44 000 43 278 722 0.02

Deficit on Disposal of Assets - 691 691 -

Interest paid - 346 346 -

TOTAL EXPENDITURE 1 070 752 939 994 130 758 12

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Detailed Income and Expenditure Statementfor the year ended 31 March 2010

  2010 R

2009 R

INCOME 961 839 140

1 067 558 236

Parliamentary allocation 937 233 000

1 039 393 000

Investment Income (Interest) 20 030 445

25 424 886

Political party registration fees 2 600

23 500

Sponsorship income 4 250 000

-

Other income 323 095

2 716 850

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20102010RR

20092009RR

EXPENDITURE

Personnel expenditure 292 978 019

275 051 025

Salaries and wages 255 905 686 270 455 867

Remunerative allowances 233 965 162 449

Gratuities 2 283 608 (9 958 696)

Employer’s contributions 34 217 860 14 017 864

Relocation costs 336 900 400 030

Detailed Income and Expenditure Statementfor the year ended 31 March 2010

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20102010RR

20092009RR

EXPENDITURE (continued)

Administrative expenditure 232 470 921

228 445 026

Subsistence Expenditure 115 573 835

85 384 265

Hotel Expenditure 5 470 288 8 274 942

Travel Expenditure 38 465 278 45 604 403

Air Transport 4 342 449 5 152 074

Communication Expenditure 16 763 973 14 831 188

Study Expenses 504 495 219 822

Advertisements 1 515 932 6 907 993

Catering/Entertainment exp. 15 112 859 18 348 904

Membership and registration 3 716 016 1 292 530

Insurance 1 091 399 1 584 452

Conference and workshops 29 914 397 40 844 453

Printing (Stock) 69 095 439 38 971 938

Purchase of Equipment and software 17 491 700 7 575 150

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EXPENDITURE (continued) 2010R

2009R

Rented equipment 2 009 045 721 504

Rental – Land and Buildings 37 455 493 44 247 655

Professional and other services 244 045 957 296 651 567

Miscellaneous expenditure 132 511 (30 386)

Depreciation and Impairment 43 277 890 35 432 587

Deficit on disposal/scrapping of assets 690 585 170 113

Interest paid 346 151 18 515

Total Expenditure 939 993 712 927 254 694

Surplus for the Year 21 845 427 140 303 542

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Audit Opinion

• Page 105 – The financial statement present fairly in all material respects, the financial position of the Electoral Commission except for the following items that where qualified;

– Administrative expenditure

(i) Operating lease expenditure

(ii) Subsistence and travelling (Temporary Electoral Staff)

– Commitments (Disclosure note)

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Audit ReportBasis of a qualified Opinion;• Administrative expenditure (Page 130, Note 22)

- Operating lease expenses – R 39 464 538The amount presented in the AFS represents the actual expenditure incurred in the current year and was correctly accounted for. The qualification is as a result of the exclusion of the future expenditure based on the lease term and escalations for the 235 MEO offices not taken into considerations as is required by the Accounting standard (GRAP13)

- Subsistence & travelling - R 121 024 188 The qualification is based on the amount of R114m paid to

temporary electoral staff who worked on election day. From the audit sample the error found by the auditors is R 27 443 but the total expenditure was qualified.

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Subsistence & travelling (continue…)

– The payment of the 200 000+ electoral staff members that worked on election day during the 2009 national and provincial elections presented some verification problems.  Issues that, amongst others, arose were:

• Not all staff members turned up for work on election day. Where there was a need for replacement formal employment contracts were not entered into with all the replacement staff members.

• There were cases where some attending staff members did not sign attendance registers or where a formal employment contract for the day was not entered into or was subsequently mislaid in the process of having to be forwarded from the more than 19 000 voting stations to central storage points.

• There were a few cases where staff members that were recruited and trained for election day, as best can be established, did not report for duty but were nevertheless paid as their details were not deleted from the electronic register before the date of payment.

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Subsistence & travelling (continue…)

• For audit purposes all expenditure had to be verified by documentary evidence. Staff are allocated to voting stations in terms of a set formula that take voter numbers and facilities into account and that in no instance were more persons paid than was supposed to be the case. Tariffs were predetermined in the electronic financial system of the IEC and that all those who were paid, were paid the correct tariffs.

• To eliminate these issues for the coming elections the Electoral Commission will concentrate all its efforts to deal with those challenges as best possible.

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Audit ReportBasis of a qualified Opinion;• Commitments (Disclosure Note) – R236 835 908 (Page 131

Note 25)This a item that is disclosed as required by the accounting standard and does not have an effect on the actual expenditure incurred in the current financial year.

The contract commitments disclosed in the AFS are contracts that the commission has either a legal or contractive obligation to make payments in future and were available for audit.

The estimated future payments included all the contracts of Commission and not only those that were legal commitments.

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Audit Report• Emphasis of matter

- Restatement of Corresponding figuresThis relates to restatement of Financial statements for the periods prior to 31 March 2010. This was mainly due to the recognition of Intangible assets which were previously expensed.Restatement was done to ensure the correct application of GRAP 102 (Note 29)

- Irregular Expenditure – Irregular expenditure relates to non-compliance with Treasury

regulations 16A6.3. The Commission did not obtain Treasury approval to participate in the First Auto, and a written submission was has since been made.

– The Commission did not comply with the PPPFA in relation to some payments of goods and services between the values of R 30 000 and R100 000.

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Irregular Expenditure (Continue…)

No action was taken against any official as there was no financial misconduct, it was only a matter of non compliance. National Treasury has been approached for condonation (Note 28).

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Emphasis of matters (continue…)

• Non-compliance with PFMA and Treasury regulations Contrary to the requirements of TR 8.2.3 and sections 38(1)(f) and 76(4)(b) of the PFMA, several payments due to creditors were settled after 30 days from receipt of an invoice

• Non-compliance with the PPPF Act and Preferential Procurement Regulations (PPR)Some bids were not advertised in the Government Tender Bulletin for a minimum period of 21 days as required by the Treasury regulations 16A6.3, these bids were advertised for a lesser period than required 21 days.

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Thank you