immovable asset register enhancement programme presentation to select committee on

Immovable Asset Register Enhancement Programme

Presentation to Select Committee on Public Services

12 November 2013

Outline of the Presentation

1. National DPW Immovable Asset Register (IAR) programme progress

2. Vesting Status

3. National Treasury Sector Specific Guide – 2013 and beyond

4. iE-Works readiness (IAR)

5. Action Plan on IAR (National & Provincial Public Works)

6. Allocation of Custodianship

7. Extension Principles of GIAMA to Local Government

8. Outcome of 2012/13 audit

1. National DPW Immovable Asset Register (IAR) programme progress

Overview of DPW IAR Programme

► Progress made from inception of Programme to 31 March 2013

► Deeds download, desktop cleansing for registered land parcels and portfolio of evidence completed

► Reconciliation of Provincial DPW’s and Human Settlements completed

► Linking of structures to land parcels significantly completed

► Sourcing of other information sources, User Asset Management Plans (UAMP’s), external databases, etc

► Created repository in iE-Works for cleansed IAR data to be placed

► Procured physical verification tool and software

► Formulated Custodian Framework for National, Capitalisation Policy

► Global State Land reconciliation completed

Overview of DPW IAR programme

► Plan from 1 April 2013 to March 2014

►On-going deeds refresher for registered land parcels

►Build IAR for surveyed and unregistered land

►Build IAR for (State Domestic Facilities) SDF’s (properties not on state land)

►Conduct physical verification of all DPW properties

►Draft and implement IAR policies

►Commence capitalisation with effect from 1 April 2013

►Apply fair value based on 2013 municipal valuations rolls

►Audit of rates and linkage to IAR

►Implement interim operating model

►Design final operating model

►Initiate Operation Amnesty (Bring-Back)

►Prepare 2013/14 Annual Financial Statements (AFS) Notes and narrative

Overview of DPW IAR programme

Operation Bring-Back

Ongoing deed refresh/ update & tracking of registered land parcels.

Implement tracking tools for monitoring at National DPW.

Mar 13 Mar 15

Deeds download, desktop cleanse & portfolio of evidence for National land

Mar 16

Other work to future-proof IAR (2019 plan)

Global state land recon

Stabilisation

Completeness of registered properties substantially

addressed in DPW family IARs

IAR complete & accurate with final FV +

snag list for follow up

Efficiency management

IAR complete integrated with DPW

business with remaining snag list

RE

VIS

ED

IA

R J

OU

RN

EY

GIV

EN

PM

TE

/ G

RA

PK

ey

mil

esto

nes

IAR complete & acurate for registered land & substantially

complete for unregistered + first round FV applied

Nov 11

PMTE migration &

GRAP 17 effective

Reconciliation of Provincial DPW and Human Settlements land parcels

Linking structures to land parcels

Sourcing other information sourcesUAMPs, external databases etc

Created repository in iEWorks for cleansed IAR data to be placed & procured tool for physical

inventory

Formulating custodian framework, cap policy, operating model, FV model , wider

requirements going forward etc

Build IARs for surveyed not registered and un-surveyed land & relevant tracking tools/ integration .

Map state land custodianship - GIS

IAR project achievements to date

based on modified cash framework include;

Conduct fieldwork given requirements to componentise, account for infrastructure & heritage

assets – use of SSP

Impairmenttest

Impairmenttest

Impairmenttest

Policies & processes for GRAP application

Apply FV based on 2009 & 2013 valuation rolls & other methods

Fine tune FV application process & other valuation

methods

Migrate IAR to basic acctg system with

linkage to detail IARDesign & Implement new “ARM” opmodel

required

Commence capitalisation and depreciation w.e.f 1.4.2013




Revised vesting process with 2016 as target date for completion

Audit of rates and correct linkages on IAR

Audit of rental stock & define correct treatment i.t.o GRAP 16

Integrate UAMPs & IAR

Clean audit requirements

Integration with FSP and other turnaround projects

Ongoing deed refresh/ update & tracking of registered land parcels. Implement tracking tools for monitoring

at National DPW.

Build IARs for surveyed not registered and un-surveyed land & relevant tracking tools/ integration .

Ongoing capitalisation processes

Mar 14

Supplementary field work requirements (in-house)

Migration to final (ERP) system

3 year phase –in of GRAP requirements but final IAR values

required for 2014Preparation of AFS between March and 31 July 2016

Progress on Immovable Asset Register – from 2011/2012 to 2013/2014 financial year end

AFS disclosure 2011/2012 2012/2013 2013/2014 Dependencies

List A - Registered land parcels 21 448 34 731 35 001 Deeds analysis

List D - Surveyed Unregistered land parcels 3 127 3 127 Physical verification

List B – Provinces registered 15 878 13 703 N/AN/A – new sector specific guide

List E – Provinces surveyed unregistered 4 125 N/AN/A – new sector specific guide

Improvements 73 398 73 435 73 435Physical verification and other sources

Audit Opinion Disclaimer Qualified TBA

Satis-factory

Good progress

Concern Risk

State land reconciliation as at October 2013(includes Registered, Unregistered and Sec 42 land parcels)

Analysis of registered land parcels by custodian

Total NDPW DRDLR Other Custodians

Human Settlements

9Provinces

Total State Land 182,345 45,150 25,258 85,503 26,434

Adjustments for:

Not considered to be state land -3,379 -2,593 -786

Subsequent deeds download and other 5,045 1,298 -56 167 3,636

Deemed provincial properties -10,743 10,743

Revised Total – Deemed State Land 184,011 33,112 25,202 167 85,503 40,027

Allocation of custodianship in progress- thus disclosed by National

1,459 -1,459

Total deemed State Land 184,011 34,571 25,202 167 85,503 38,568

Unregistered Land - National DPW 3,127 - - - -

Deemed provincial land (Unvested) – disclosed by National

13,703 - - - -13,703

Deemed provincial land (Surveyed not Registered) – disclosed by National

4,125 - - - -

Amounts to be disclosed in the Annual Financial Statement ending 31 March 2013

55,526 25,202 188 85,503 24,865

NDPW is currently busy resolving

New deeds download has been requested. Some anomalies have been found on the download. NDPW will distribute deeds data to Provinces on receipt

Section 42 transfers from National to Provinces for 2014 AFS

Position with Provincial DPW’s as at October 2013 (AFS submission) (includes Registered, Unregistered and Sec 42 land parcels)

Land parcels EC FS GP KZN LP MP NC NW WC Total

Total state land (download 1) 40 5,123 682 4,286 943 2,571 1,180 2,612 8,997 26,434

Less adjustments for:

Not state land -185 -361 -1 -21 -26 -4 - -61 -127 -786

Other

Deemed provincial properties 3,038 1,166 5,428 3,201 3,019 -306 275 746 -2,188 14,379

Revised total: Deemed state land 2,893 5,928 6,109 7,466 3,936 2,261 1,455 3,297 6,682 40,027

Final custodianship to be confirmed (Work in progress) -40 -6 -69 -878 -2 -9 -220 -50 -185 -1,459

Confirmed and final amounts to be disclosed by custodians as at 31 march 2013 - registered

2,853 5,922 6,040 6,588 3,934 2,252 1,235 3,247 6,497 38,568

Deemed provincial land (Surveyed not Registered) – disclosed by National

-1,333 -1,245 -4,266 -3,687 -573 -691 -164 -666 -1078 -13,703

Confirmed and final amounts to be disclosed by custodians as at 31 March 2013 - total

1,520 4,677 1,774 2,901 3,361 1,561 1,071 2,581 5,419 24,865

NDPW is currently busy resolving S42 from National to Provinces Inconsistent numbers as per 2012/13 Sector Guide

Progress on Properties Devolved to Provinces as at October 2013

Land parcelsEC FS GP KZN LP MP NC NW WC Total

Total initially devolved by National 5,076 3,500 10,020 11,929 3,035 3,004 1,363 6,469 5,968 50,364

Duplicates/not found/consolidations 1 - 0 193 21 1 - 5 0 221

Confirmed National 1,087 310 1,064 219 502 293 16 579 173 4,243

Confirmed Provincial incl .in IAR 1,577 1,501 7,545 6,353 1,123 1,856 772 1,342 1,604 23,673

Confirmed Provincial as vested 1,013 1,510 1,132 1,986 265 439 468 961 3,044 10,818

Confirmed as DRDLR 16 132 160 1,295 33 91 3 120 0 1,850

Confirmed Municipalities 177 8 0 325 68 0 3 1,155 79 1,815

Confirmed Human Settlements - - 0 43 0 0 3 575 9 630

Parastatal & Private* 911 31 14 995 1,023 323 80 1,719 788 5,884

Remainder

Further investigations required* 294 8 105 520 0 1 18 13 271 1,230

Sign-off’s received from some provinces for properties confirmed (FS,WC,MP,KZN,LP and GP)

Physical verification in KZN, WC, NW, and EC is underway being conducted by Provinces and DPW project managers.Investigations on devolved properties must be completed on or before 30 October 2013.Section 42 transfers to Provinces including supporting documents to be completed by 30 October 2013.

Progress made on physical verification for week ending 25/10/2013

2. Vesting status

National Vesting Report September 2013 – per province

NATIONAL EC FS GP KZN LP MP NC NW WC Total

TOTAL LAND PARCELS IN IAR * 2,986 2,786 5,902 9,437 4,474 2,908 2,776 3,124 5,419 39,812

LAND PARCELS VESTED SINCE 27 APRIL 1994

1,358 2,410 2,689 1,918 649 1,395 1754 429 2,430 15,032

NUMBER OF LAND PARCELS STILL TO BE VESTED

1,628 376 3,213 7,519 3,825 1,513 1,022 2,695 2,989 24,780

* TOTAL LAND PARCELS IN IAR = Total land parcels in DPW IAR 2013 as provided to SSP in August 2013 for physical verification.

Vesting Report September 2013 – per province (National and Provinces)

Custodian – statistics according to LAW

EC FS GP KZN LP MP NC NW WC Total

National DPW 1,358 2,410 2,689 1,918 649 1,395 1,754 429 2,430 15,032

DRDLR 2,114 654 128 635 3,061 1,685 436 1105 0 9,818

Provincial DPW/GDID 2,625 1,125 2,854 5,958 670 1,512 741 1515 3,358 20,358

Human Settlements/DLGH 405 46 438

Total 6,097 4,189 6,076 8,557 4,380 4,592 2,931 3,049 5,788 45,659

► Draft vesting business case provided to provinces to replicate National vesting business case;

► DRDLR finalised the vesting business case for their department.

► NDPW to coordinate vesting progress reports as well as targets for the year for provinces.

► Each custodian is required to reconcile the LAW statistics with own vesting records to ensure correct starting point.

3. National Treasury Sector Specific Guide 2013 and beyond

Sector Specific Guide – requirements for 2013/14

► Un-surveyed land to be disclosed by Department of Rural Development and Land Reform (DRDLR)

► From 1/4/2013 onwards, once the custodian has confirmed that the registered land parcel is theirs the custodian will be required to reflect these in their IAR and AFS (vested or not vested)

► From 1/4/2013, once the custodian has received SG diagram from DRDLR (Chief Surveyor General -CSG), the custodian will be required to reflect these surveyed not registered land parcels in their IAR and AFS

► Where it is not clear or where SG diagram is received after 30 September each year, the land parcel will be disclosed by DRDLR in their IAR and AFS

► National: SDF’s All facilities used by the national government located on un-surveyed land or surveyed but unregistered land incl former TBVC States and Self Governing Territories and state land in the former RSA (pre April1994); or governed by KZN Ingonyama Trust Act; should now be disclosed by the National Department of Public Works.

► Provinces: SDF’s All facilities used by the provincial government located on un-surveyed land or land governed by the KwaZulu-Natal Ingonyama Trust Amendment Act (pre 24 April 1994)

► All properties where agreement of custodianship had been reached and a transfer in compliance with Section 42 (PFMA) had been received must be disclosed by the respective custodian.

► The Sector Specific Guide is in the process of being reviewed in conjunction with the provinces.

4. iE-Works readiness

iE-Works readiness

► CFO Forum tasked DDG:AIM to confirm readiness and functionality of iE-Works for Provinces.

► Currently, DPW Information Systems (IS) unit is engaging with provincial custodians at operational level on iE-Works matters.

► Work session was convened with provinces on 28 October 2013 where Provinces were taken through the status of iE-Works to date

and recommendations were made, that:

► iE-Works be considered as a platform of choice by national and provincial public works custodians for uniformity;

► Business user sign off for provinces be at CFO level by 15 December 2013;► End user review of completed modules in the 1 Quarter of 2014/15;► Data templates be set up between DPW and provinces;► User acceptance test and training phase by DPW; and► Go-live pilot

Provinces will be migrated to iE-Works System as and when they have completed their data cleansing exercises and after submitting and verifying their own data.

5. Action Plan on IAR

Action Plan on IAR (National and Provincial Public Works)# ITEM/ ACTION TIMEFRAME RESPONSIBLE PERSONS STATUS/ PROGRESS

1. Address Management Assertions (completeness, existence, rights & obligations, accuracy & valuation, presentation & disclosure) and Reconciliation

31 March 2013 &31 March 2014Continuous

Ms F Rabada: CD ARMMr S Sokhela: D ARMProvincial Representatives

State land reconciliation completed for 2012/2013Provincial Tracking Templates developed

2. Capitalisation of State Immovable Assets

31 March 2014 Ms F Rabada: CD ARMMr S Sokhela: D ARMProvincial Representatives

DPW draft policy currently being reviewed by all stakeholders

3. Vesting of State land 31 March 2016 National Vesting Task Team (DRDLR, DPW and Provinces)

DPW Vesting Business Case developed and forwarded to Provinces

4. Surveying of State Land 31 March 2015 Mr R Salig: CD CSGNational Vesting Task team to monitor

CSG assisting custodians to survey SDF’s

5. Devolution of Immovable Assets to Provinces

31 March 2014 Mr S Sokhela: D ARMRegional Project CoordinatorsProvincial Representatives

90% completeProvinces to confirm custodianship

6. Compliance of IAR to relevant prescripts (PFMA, GIAMA, National Treasury guidelines)

31 March 2013 &31 March 2014Continuous

Mr S Sokhela: D ARMProvincial Representatives

Audit Action Plan for national and provinces to address compliance at each financial year end.

7. Custodians of State Immovable Assets – DPW Framework

31 March 2014 Ms F Rabada: CD ARMProvincial Representatives

Draft framework has been developed for national Provincial custodianship confirmed with the Premiers Framework for provinces to be developed

8. Operation Bring Back 31 March 2014, 31 March 2015 & 31 March 2016

Ms F Rabada: CD ARMProvincial Representatives

Work in Progress (Deeds Reconciliation and physical verification of properties).

Provincial reporting template – sample extract

6. Allocation of Custodianship

Custodian summary

# of user departments

# of users who are also custodians

Public Works or DID

Human Settlements/ Local Government & Housing

Office of the Premier

Eastern Cape 13 1

Free State 12 2

Gauteng 13 2

Kwa-Zulu Natal 16 1

Limpopo 12 1

Mpumalanga 12 1

North West 11 1

Northern Cape 13 1

Western Cape 14 2

National 52 6

Public Works Defence Endowment

Environmental & Water Affairs

Rural Development & Land Reform

Agriculture and Forestry

International Relations

National custodians

Provincial DPW – Cabinet resolution dated 13/06/2007Provincial Housing – Act 4 of 2001, Housing Amendment Act

** There is a need to define and confirm the accounting treatment (control) in each province given the current legislative environment

Letters to all provinces to confirm custodianship have been sent out. All the Provinces have responded

Confirmed Outstandin

g

7. Extension Principles of GIAMA to Local Government

Fundamentals of GIAMA: National/Provincial vs. Local Government

GIAMA provides a framework of basic principles in accordance with which national and provincial departments must manage the immovable assets that they utilise or control in executing their mandates.

GIAMA is structured around the following building blocks –

A) Role-players involved in the acquisition, operation and disposal (custodians) and the utilisation (users) of the State’s immovable assets;

and

B) Management processes within government.

Whilst the management of all spheres of government stem from the same fundamental principles, the role-players involved in immovable asset management and the strategic management processes of local government differ significantly from national and provincial government.

National/Provincial vs. Local Government

A) Role-players: National & Provincial Government

Users: Departments who utilise immovable assets in the performance of their functions.Required to compile annual user asset management plan (U-AMP).

Custodians: Departments who perform “caretaker” functions in relation to immovable assets.

Required to (1) provide information on immovable assets allocated to users, to inform compilation of U-AMPs; and (2) compile annual custodian asset management plan (C-AMP).

A) Role-players:Local Government

No standard institutional delineation between users and custodians of immovable assets.

No separate accounting officers in various departments within a Municipality.

National/Provincial vs. Local Government (Contd…)

B) Management Processes: National & Provincial Government

National / Provincial Departments (both users and custodians) are obliged to compile annual immovable asset management plans as part of their annual strategic planning process.

User and Custodian Asset Management Plans must be submitted to relevant Treasury to inform annual budget allocations.

B) Management Processes: Local Government

In terms of Municipal Systems Act, 2000 a Municipality is obliged to develop an Integrated Development Plan (IDP) at least every 5 years, which serves as its principal “strategic management planning instrument”.

Municipalities are required to annually review their IDP and this should inform their annual budget.

National/Provincial vs. Local Government (Contd…)

Municipalities are governed by specific body of legislation, of which the Local Government: Municipal Systems Act, 2000 (MSA) and the Municipal Finance Management Act, 2003 (MFMA) are most relevant to immovable asset management -

The principal strategic planning document of a Municipality is its Integrated Development Plan (IDP).

The MSA prescribes a specific process for the compilation of IDPs, which must also be aligned with provincial development plans and national priorities.

The MSA also prescribes comprehensive consultation requirements in relation to the compilation of IDPs.

National/Provincial vs Local Government (Contd…)

An IDP is an inclusive strategic plan guiding all development within a Municipality. In terms of the existing regulatory framework, an IDP may, as part of its financial strategy, contain an asset management strategy.

The shortcomings in the existing IDP process, however, are that – it does not detail a specific immovable asset management planning

process; and it does not make immovable asset management mandatory, as is

the case in GIAMA.

Current position: Extension of structured Immovable Asset Management to Municipalities

Due to key differences in the legal framework and organisational structure of local government compared to national and provincial government, it would be problematic to incorporate Local Government into the existing legislation (GIAMA) rendering it very convoluted.

DPW therefore holds the view that a different approach would be

advisable to extend the principles of GIAMA to local government -

Alternative 1:

The requirements for immovable asset management could be incorporated in (a) separate set of regulations issued in terms of the Municipal Systems Act; or (b) amendment to the existing Local Government: Municipal Planning and Performance Management Regulations, 2001 issued in terms of that Act.

Current position: Extension of structured Immovable Asset Management to Municipalities (Contd…)

Alternative 2:

Specific legislation could be developed, based on the requirements, organisational structure and existing legal framework governing municipalities.

DPW has renewed discussions with the Department of Cooperative Governance regarding the optimal approach and timeline to extend the principles of GIAMA to local government. The objective is to reach agreement on specific objectives commencing in 2014/15.

8. Auditor General Response on National DPW IAR submission for the year ending

2012/2013

AG Opinion on DPW IAR 2012/2013

Assertion Approach Comment

Completeness

(Main Focus for 31 March 2013)

-Use of deeds download in conjunction with DRDLR & extensive reconciliation of data with other state land custodians for all registered properties.-Deeds / Aktex is used as a basis and substantiated with other documents & Sources e.g. Copy Original Title deeds & SG diagrams-IAR fields checked against NT minimum requirementsCompliance with the Sector specific guidePosition with provinces confirmed (List A/B) to determine who discloses what.

Dependencies:-Extent of Un-surveyed land to be received from the CSG-Reliant on Deeds for the registration of unregistered land -Completion of Vesting process for National and Provincial properties-Provinces confirming properties supplied to the AG and Provincial Usage properties(List A/B)

Accuracy & Reliability

-Initial reference is made to the Aktex and substantiated by original title deeds and SG diagrams for accuracy.-Data cleansing performed and fieldwork to be performed

Dependencies:-Availability of original title deeds/ docs-Surveying of land

OwnershipRights & Obligations

-Ownership is confirmed as per Aktex / Title Deed-Vesting process is also confirming ownership-Surveying of state land to confirm ownership-Physical verification to prove property use & confirm custodian

Dependencies:-Surveying & Vesting process scheduled to be completed by 31 March 2016

Existence -Conducting physical verification and other desktop methodologies to prove existence and have photos, GPS Coordinates & SG diagrams as portfolio of evidence

-Desktop exercise performed to prove existence.-Physical verification to commence Jun 2013

Valuation -Fair Value model – (1) Municipal values (where Valuation Roll not qualified) and then (2) Sales Comparison Method (where there are no valuation rolls ) & (3) Depreciated Replacement Costs (where there are no valuation rolls) for specialised buildings.

-Intention is to use 2013 municipal values and this will be available for the 2015 year.

Presentation & Disclosure

Comply with the NT requirements and sector specific guide Reliant on other National Custodians and provinces providing their List A &B in order to identify what DPW must disclose.

Unqualified Qualified

AG Opinion on DPW IAR 2012/2013…cont

► " The immovable asset disclosure note is not accurately valued to the effect that an amount of R664 million has been included – relating to renovation and refurbishment costs. The department was unable to establish which portion of the amount in question should have been capitalized and failed to allocate the R664 million to specific individual assets, thus resulting in the inability to verify the fair presentation with regards to valuation of immovable assets." AG

► DPW IAR has been qualified on work-in-progress (valuation).

AG Opinion on DPW IAR 2012/2013…cont

► In order to address the valuation assertion in the DPW IAR for 2013/2014 the following will take place with the effect from 1 April 2014;

Fair Value model will be applied to all properties and components (as required by GRAP)

Capitalization policy will be applied to all work- in- progress amounts

Audit opinion 2012/13 - Provinces

Province 2012/2013 AG audit opinion

Eastern Cape Disclaimer

Free State Qualified

Gauteng Unqualified

Kwa-Zulu Natal Unqualified

Limpopo Disclaimer

Mpumalanga Unqualified

North West Disclaimer

Northern Cape Unqualified

Western Cape Unqualified

The above information has been confirmed with the Provinces

Thank you

immovable asset register enhancement programme presentation to select committee on

Documents

land parcelsndpw

registered land parcels21

unregistered landbuild

unregistered land parcels3

state land184

cleansed iar data

deeds data

dpw propertiesdraft