National Public Works

Immovable Asset Register Programme (IAR)August 2012

Page 2

Executive Summary

► DPW embarked on the reconstruction of its IAR in November 11 and has completed an extensive exercise of ► analysing the deeds database & other relevant registers/ information sources to assist in determining which

properties are National, Provincial or other custodians’► defining a fair value model which will be applied to properties as the carrying value going forward► defining a new operating model to better manage the IAR and DPW’s concurrent mandate going forward

► This reconstruction exercise has identified a significant amount of work that is required to resolve a multitude of unresolved legacy issues which requires extensive interaction with DRDLR, Provinces, NT and other stakeholders

► The approach adopted by the IAR programme will ensure that a baseline compliant IAR is produced covering all required assertions (completeness, accuracy, ownership etc)

► The gaps identified indicate that a significant amount of work (including physical inspections) is required in order to comply with NT and audit requirements as current compliance level is in the region of 40-50%.

► DPW HO and Regional teams are in the process of completing data analysis and cleansing that arose from Deeds comparisons and are expected to complete this by (1) 30 Sep 12 and (2) 31 Dec 12

► The cleansed data will form the basis of physical inspections from Oct 12 to Aug 13 to confirm information required to comply with requirements

► The position with the Provinces and compliance with NT Sector Specific Guide will be regularised by March 2013 with relevant follow up work by Aug 13

► Our target is to have a substantially complete and compliant IAR by March 2013 with required follow up of remaining gaps to be completed by Sep 13

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Executive Summary - Key successes

► There is a clear plan outlining what needs to done to produce a baseline compliant IAR incorporating all work previously done (where applicable)

► Our time spent on extensive analysis, research and consultation with relevant stakeholders has confirmed the complexity and extent of work required which was addressed in prior projects

► We have engaged extensively with stakeholders such as the AG, OAG, the Provinces to confirm our plan. We are again meeting with the AG during August 12 to confirm deliverables.

► We have developed a custodian framework which will inform disclosure requirements and provide clarity going forward

► We have developed a fair value model to value the IAR by Mar 2013 and a compliant capitalisation policy to ensure the IAR remains properly valued going forward

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Executive Summary - Key challenges & risks

► We are still experiencing challenges in working with key stakeholders such as Deeds, CSG and other custodians to ensure that the right information and decisions are forthcoming to resolve state land issues and incorporation in correct IARs / financial statements

► Mobilising sufficient resources in time given that significantly more work is required than originally anticipated due to;► unresolved legacy issues (e.g. finalising devolution of provincial properties) and ► exceptions arising from data analysis and deeds comparison

► There is still a material risk attached to the data available to inform fieldwork requirements► Mobilising (in time) the requirements of DPW’s concurrent mandate► Implementing a revised operating model (in time) to continue maintaining the IAR► Incorporating work previously performed or performed by other State departments in line with

our timelines, e.g. ► Defence UAMPS► CSG state land audit

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Index to report

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Background to DPW’s Asset Register

► Prior 1994, there was no comprehensive computer-based register of state-owned immovable assets. Information on assets was captured in a variety of disjointed inventories, most of which were manual paper-based systems.

► In 1995 the Department of Public Works commenced with the compilation of a comprehensive computer-based inventory of immovable assets under the control of both national and provincial custodians. The project was undertaken with the assistance of private contractors and completed in 1999.

► The information that was gathered included physical address of properties; cadastral description and extent of land parcels; utilisation and users of properties; zoning and potential use of properties; and photographs and footprint sketches of sites and improvements.

► In order to address the gaps identified from the above-mentioned project, in 2005 DPW embarked on the Asset Register Enhancement Programme (AREP) and was completed on 31 March 2008, to enhance the asset register. The scope of the project focused only on 33 555 immovable assets and the following information was enhanced:► Linking of land parcels with improvements;► Measuring floor areas of buildings where such information was not previously captured;► Establishing use and identity of occupants; ► Capturing servitude rights over selected state properties; and ► Capturing photographs, drawings and footprints of improvements for the selected properties.

► Servcon and Intersite Solutions were further appointed in December 2007 to verify the essential information fields of DPW’s and provincial Public Works’ asset registers and conduct condition assessments on State-owned properties.

► In 2009, DPW and the service providers resolved to put the project on hold in order to verify the authenticity of data to determine the amount payable to the service providers.

► Asset register is a continuous exercise due to the incompleteness and inaccuracy of information

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Applicable assertions

Assertion Approach Comment

Completeness -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 e.g. Original Title deeds & SG diagrams-IAR fields checked against NT minimum requirements- Compliance with the Sector specific guide, position with provinces confirmed (List A/B) to determine who discloses what.

Dependencies:-CSG for provision of surveyed land -Deeds for the registration of unregistered land -Vesting process for National and Provincial properties but we are reconstructing a complete position by virtue of Deeds analysis & recon-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/ docsSurveying of land

OwnershipRights & Obligations

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

Dependencies:Surveying process scheduled to be completed by 31 March 2014

Existence - Physical verification to prove existence and have photos, GPS Coordinates & SG diagrams as portfolio of evidence

For 2012/13, 60-70% of properties will have been verified.

Valuation -FV model developed and in process of socialising To be applied 2012/13

Presentation & Disclosure

-Extensive interaction with provinces, DRDLR and other custodians

Aim for 2012/13 is to have first proper consolidated view and to ensure right properties disclosed in right AFS

Completeness will be qualified until CSG completes survey process , but IAR Programme aims to provide a reconciled position of State land by 2012/13

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Programme on a page

Aug 12 Sep 12 Oct 12 Dec 12

Data cleanse, reconciliation, resolve position with provinces

Detail design of new operating model

Pack IAR

Apply FV model

IAR adjust/ quality checks

#1Finalise capitalisation

framework

Detail design revised vesting process

Jan 13

Implementation of revised vesting process

Wave 2 of SSPfor 6 regions

Nov 12

IAR preparation & presentation

Proposed timeline/ sequence

Feb13 Mar 13 April 13 May 13

Fieldwork 1 6 regions

2GP, KZN, WC, FS,NC

Design & approve FV

model

Design new vesting process

Aug 13 May 14

High level operating

model

Acquire tool

Design & test tool

Fieldwork 1 has to finish by end Jan/

mid Feb

SSP adjudicateend Aug

SSP on-board,

roadmap, train

Recruit PM in

regions

PMs trained & onboard

Operate new operating model or interim structureImplement new

operating model

IAR will comprise:•+-60% physical verification, remainder comprises desktop cleansed data•Defence UAMPS processed•Provinces accounted for + snag list•Devolution done + snag list•NT sector specific requirement incorporated in IAR (Provinces)•FV1 based on input from inspection•FV2 based on municipal value & desktop

Mar 14

Fieldwork 2 Remaining 5 regions

Apply FV

Sep 13

AG review final

product

Conduct AG fixes

Final IAR & snag list

Final IAR

Pack IAR

IAR adjust/ quality checks

#2Hand-over

Focus for 2013 is on completeness based

on Deeds & accuracy improved

given data cleanse & fieldwork

Position with

provinces sorted

Deeds refresh process

Remaining assertions addressed & ongoing

update process

State land audit information to be

incorporated

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Key results of analysis conducted thus far

Analysis of Deeds # properties

Total state land 182 345

Identified as provincial (111 937)

Identified as DRDLR (25 258)

Deemed National DPW 45 150► As a result of quantifying the above position, extensive engagement and confirmation with

other custodians & stakeholders is required before finality can be reached► We are still in the process of analysing and confirming above statistics

► This is a complex process & there are still significant challenges in identifying ownership given a multitude of naming conventions and given that the vesting process is still underway

► National DPW has previously disclosed +- 35 000 properties in its annual reports► We have so far confirmed +- 27 000 properties by reference to Aktex as being National DPW’s► The remainder is currently being analysed and categorised and will be subject to relevant field work if

required

► Of the +- 50 000 properties identified on our current IAR as potentially being provincial properties, we have confirmed that +- 16 000 are indeed provincial properties that we are still required to disclose as they have not been vested by the provinces (NT sector specific guide requires DPW to disclose such)► The remainder is currently being analysed and forms part of the current engagement with the provinces to

confirm disclosure requirements by National and Provincial DPWs

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Position with provinces

Provinces Reconciliation

FY 2012 EC FS GP KZN LP MP NC NW WC Total

Number of records per Province as per Deeds 9,030 5,146 28,717 22,126 8,515 13,357 1,438 2,717 20,891 111,937

Number of records as per AG 9,900 4,931 14,295 5,759 966 6,021 2,158 762 11,562 56,354

Number of records as per Province Register 9,752 4,931 540 2,064 966 5,400 422 762 4,778 29,615

Clear Province names 8,191 5,085 27,738 21,227 8,486 13,269 945 2,556 19,129 106,626

Boards 181 33 436 562 2 28 8 821 2,071

Trustees 218 3 6 39 6 135 28 783 1,218

Education 440 25 537 298 23 86 330 125 158 2,022

Total 9,030 5,146 28,717 22,126 8,515 13,357 1,438 2,717 20,891 111,937

* Please note that the 111,937 from DEEDS excludes unregistered land parcels* Clear Province names is defined as any variation of the Province name and includes all hospitals * Boards - Are all development, housing and village management boards* Trustees - Are all Educational, Hospital and Road Trustees* Education - Are all schools (pre, primary and high schools), colleges and universities* Please note that these are English and Afrikaans names

It is clear from above that a significant amount of work is still required to clarify the position with provinces and to ensure accuracy and consistency of disclosure required in terms of current applicable frameworks► National DPW has allocated a specific team to resolve this by March 2013 in order to provide a consistent and reconciled national view of all state land► National DPW is engaging at MINMEC, HOD and GIAMA forums to address the above

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Vesting process

► Our focus to date has been on laying the foundations to address all assertions required to produce a baseline compliant IAR

► We are aware that progress* on vesting is significantly behind target at all levels of government (DPW 40%,DRDLR 33%, Provinces 16%) in order to achieve the target date set at 2014 in terms of vesting master plan (agreement between DRDLR, DPW, Provinces)

► We have completed the design of required interventions to address the vesting backlog in consultation with DRLDR and will implement revised process by Sep 12

► Progress statistics and proposed intervention provided in Appendix

*stats sourced from DRDLR

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Action Plan on IAR Concurrent Functions (National and Provincial Public Works)

National Public Works

Immovable Asset Register Programme (IAR)August 2012

Appendices

Appendices

Enhanced vesting process 15Vesting stats 16 -17

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Discrepancies investigated-Missing item 28(1) certificates-Differences in the vesting stats

Discrepancies investigated-Missing item 28(1) certificates-Differences in the vesting stats

Start

Start

Reconcile

Reconcile

Rec

onci

le

Registered properties

Unsurveyed land in former RSA

Land parcels not yet vestedLand parcels not yet vested

Unregistered propertiesUnregistered properties

Surveying process of underlying land

Surveying process of underlying land

Registration process – National Republic of South Africa

Registration process – National Republic of South Africa

Completed PSLDVC application

Obtain PSLDVC resolution (May require more frequent meetings)

Obtain PSLDVC resolution (May require more frequent meetings)

Submit PSLDVC application

(for recommen-dation)

Submit PSLDVC application

(for recommen-dation)

Capture PSLDVC application on LAW system

(PSLDVC Secretariat in DRDLR region)

Submission by DRDLR HO

DG Signs certificate

Issue S28(1) certificate

Submission by DRDLR HO

DG Signs certificate

Issue S28(1) certificate

Applicant instructs State Attoney to lodge & Registrar of Deeds Endorses

Applicant instructs State Attoney to lodge & Registrar of Deeds Endorses

PaperTrail & physical

verification (Docs &land use) input

PaperTrail & physical

verification (Docs &land use) input

Bulk vesting at H/O Prepare PSLDVC

Application

Bulk vesting at H/O Prepare PSLDVC

Application

QC at HO & (Regions)

QC at HO & (Regions)

DRDLR PROCESSES

Tracking & MonitoringTracking & Monitoring

1.Reconciliation between various sources.2.PaperTrail and physical verification inputs.3.Bulk vesting process at Head Office

1.Reconciliation between various sources.2.PaperTrail and physical verification inputs.3.Bulk vesting process at Head Office

11

22

33

4455

Proposed interventions 4.QC at HO and Regions before preparing/submitting application.5.Tracking, Monitoring and status updates –access to the LAW system6.Central dB to track movement of vesting status for DPW to track

4.QC at HO and Regions before preparing/submitting application.5.Tracking, Monitoring and status updates –access to the LAW system6.Central dB to track movement of vesting status for DPW to track

Update DPW IAR

(need for centralised, iEWorks dB used by all)

66

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National DPW vesting statisticsCumulative from April 94 to Jun 12

Province31 Dec2011

30 June 2012

Vesting certificates Issued

Dec 11 to Jun 12

EC 1,292 1,292 0

FS 2,194 2,223 29

GP 2,091 2,158 67

KZN 1,835 1,858 23

L 499 525 26

MP 962 1,008 46

NW 353 383 30

NC 1,470 1,570 100

WC 2,356 2,362 6

Total 13,052 13,379 327

DPW’s current vesting process is not properly structured and not managed

appropriately. There is a lack of information given the current state of

the IAR and inadequate project management.

An enhanced vesting process has been designed in consultation with DRDLR and will be implemented in September

2012.

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Cumulative vesting statistics April 1994 to 30 June 2012

NATIONAL DRDLR PROVINCES

Province IAR VestedStill to be

vestedIAR Vested Deeds Vested

EC 2,336 1,292 1,044 7,149 1,920 7,911 2,423

FS 3,179 2,223 956 616 648 5,145 1,118

GP 8,791 2,158 6,633 851 153 29,016 2,485

KZN 4,589 1,858 2,731 7,271 633 22,196 5,937

L 2,333 525 1,808 2,475 3,181 8,500 653

MP 2,375 1,008 1,367 3,604 1,341 13,257 1,127

NW 2,035 383 1,652 2,083 609 2,738 772

NC 2,327 1,570 757 453 326 895 730

WC 4,963 2,362 2,601Not

ProvidedNot

Provided22,279 3,255

TOTALS 32,928 13,379 19,549 24,502 8,871 111,937 18,500

Appendices

Results of deeds and other reconciliations 19-21

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Deeds Reconciliation

► Assumptions and limitations: ► Based the analysis on DRDLR’s LAW predetermined ownership categories as follows:

► 1. State Land Properties ( Provinces and National)► 2. Parastastals Properties ► 3. Municipality Properties► 4. Unknown Properties - Usually cleared & and is blank► 5. Private Properties and ► No registered Owner

► Shares – properties with multiple registered owners on the deeds web are being analysed separately► There are also duplicates within the data received from the deeds office► All National properties where DRDLR does not have supporting documentation are deemed to be National DPW properties unless accounted for by

another custodian

► ,,Total number of records in Deeds File 68,458,007

Total number of Properties in Deeds File 7,395,908

State Land (Category 1) ( Provinces and National) 182,345

Parastatal (Category 2) 10,255

Municipality (Category 3) 977,536

Private (Category 5) 6,225,772

Total State Land 182,345

Less : Provincial Registered parcels -111,937

= All National registered land parcels(DPW, DRDLR, DWA) 70,408

Less: DRDLR ( Need the list of Current DRDLR less what is in Deeds) -25,258

Total Remainder of National Registered properties to be compared to the PMIS Immovable Asset register in order to identify properties on Deeds but not on PMIS - Unique land parcels to be added to PMIS list. 45,150

Deeds Analysis

Objective: State Land as per Deeds AnalysisTo identify properties not accounted for in the Provincial Asset Registers and other National

State Land as per Deeds

These properties include other National Custodians as per the Custodial Framework

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DPW IAR (PMIS) analysis - Own

Cat Descriptor after the Aktex Verification

TOTALLand Parcels Include in IAR

Ringfenced for further follow up

Should be excluded Comment

1 Aktex contains reference to "National" hence included 4,969 4969 Deemed DPW National 2 RSA or derivative thereof 16,471 16471 Deemed DPW National 3 Other:Probable: Department of Public Works Properties 8 8 Various for follow up5 Provincial Properties ( Clearly Provincial Names) 1,209 1,209 Not National DPW7 Private Properties ( Individuals, Companies, Municipalities, Parastatals & Agencies) 3,659 3,659 Not State Land

12 Other State Departments (DRDLR, DWA, DOD) 3,341 3,341 Other Custodians13 Tribal Land 110 110 Verify property usage11 Foreign Properties 101 101 DIRCO has custodial powers

9 Property no longer exist 261 261 Expropriated/ consolidated/ re-numbered6 Permission To Occupy and Build (PTO's and PTOB's) 401 401 Verify property usage8 Unregistered - no title holder 4,366 4,366 Investigating

10 DUMS 976 976 DuplicationsPre September Records - Balance between 31 March 2011 AFS to 30 Sept 2011 23 23 For follow up

35,895 21,448 6,027 8,420 4 Department of Public Works Properties Transferred from the Devolved file 1,336 1,336

15 Properties from Deeds and not PMIS 5,354 5,354 42,585 21,448 12,717 8,420

► Above will form basis for fieldwork and workpackages going forward

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DPW IAR (PMIS) analysis - provincial properties included in PMIS

► Based on the 2011 PMIS system 50,364 properties were classified as provincial and formed basis of analysis

Devolved: DPW 50,364

Cat Descriptor after the Aktex Verification

TOTALLand Parcels Include in IAR

Ringfenced for further follow up

Should be excluded Comment

1 Aktex contains reference to "National" hence should be moved to Masterfile 1,336 1,336 Deemed DPW National 2 RSA or derivative thereof 15,863 15,863 Deemed Devolved Provincial Properties3 Provincial Properties ( Clearly Provincial Names) 10,818 10,818 Deemed Vested properties & Should be dislosed by the provinces4 Private Properties ( Individuals, Companies, Municipalities, Parastatals & Agencies) 8,994 8,994 Not State Land6 Unregistered - no title holder 6,961 6,961 Investigating basis of inclusion on IAR8 Other State Departments 346 346 Other Custodians9 Former Model C Schools 2,047 2,047 Former Model C schools belongs to the provinces & will be vested provincially

10 Permission To Occupy and Build (PTO's and PTOB's) 2,260 2,260 Verify property usage11 Government trusts 307 307 These are Education, Hospital & Road Trustees - belongs to the provinces12 DUMS 372 372 15 Disclosed by DRDLR 950 950 16 DIsclosed by DWA 95 95 17 DAFF 15 15

50,364 15,878 12,293 22,193

AFS Treatment