Following revelations that the KwaZulu-Natal Department of Agriculture and Environmental Affairs (DAEA) was in a dismal financial and operational state due to poor management, the latest incumbent of the post of MEC for this department, Mtholephi Mthimkulu, has had his hands full in planning a turnaround strategy for the DAEA. In his inaugural 2007/08 budget speech, in a remarkable display of transparency, Mthimkulu gave a candid account of the problems within the KZN DAEA as well as outlining possible solutions to them.
When KwaZulu-Natal premier Dr Sibusiso Ndebele appointed me to be the political head of this department from November 2006, he was very frank. He told me that the Department of Agriculture and Environmental Affairs was in a serious mess and needed a total turnaround. I underestimated what he said, but when I joined this department and subsequently received the internal audit report (IAR), I realised the premier meant serious business.
The image of this department presently lies in tatters. The damning report I mentioned exposed administrative weaknesses and possible contraventions of the Public Finance Management Act. As government we understood the negative sentiments expressed by all members of the KwaZulu-Natal parliament during the debate on the findings of the IAR, and these sentiments were justified. Lack of supporting documentation The internal auditors found that there were unsupported transactions, similar to the findings of the auditor general. This is something that is definitely not acceptable to us and to any government institution that has to account for the use of public resources, and this calls for swift corrective action.
Some of the serious shortcomings on matters of compliance within departmental management include the following: payments were not adequately supported with source documentation, including orders, supplier invoices and delivery notes; departmental policy and/or guidelines from Treasury were not followed; invoices were not always signed, cancelled or stamped “Paid” to reflect that they had been paid to prevent their re-submission for payment and duplicate payments; journals were not always supported with source documentation or adequate explanations; and commitments were not cleared once payments had been made. This resulted in commitments remaining open even after payments had been made, and therefore commitment balances became inflated.
A number of departmental key policies of the agrarian revolution had not been approved prior to my acceptance of them, but they are all now approved and signed. These include: the indigenous livestock policy; the mechanisation policy; the mentorship policy; the funding policy; the build, operate, train and transfer policy; and the unsolicited bid policy. Although some of these policies will be constantly reviewed and amended in line with best practices, it was important to approve them. They also form the basis for documents that support payments that are made.
Asset management
Another significant finding was on the lack of asset management. Our acting chief financial officer has given us a plan indicating that there will be an updated asset register for all classes of assets within the next three months. Although biological assets are recorded on a separate manual livestock register as found by the internal auditors, we have devised a programme to better manage these assets. This includes the fact that biological assets that were not valued and accordingly not disclosed in the 2004/05 and 2005/06 financial statements will now be properly valued.
Our team will also, by the end of June this year, have reconciled all cattle given to beneficiaries, branded them, and have a definite number of the stock still held by the department at various locations. Further allocations to beneficiaries will be made only after this process has been concluded.
Irregular expenditure
Unauthorised expenditure is a function of bad planning. In a department such as ours, good planning is not only necessary to ensure that we keep within expenditure, but also to guarantee good results. To this end we have instructed our chief operations officer to create a template for standardised business plans, and ensure that for each of the programmes of the department there are properly costed business plans.
Consequently each business unit will have a business plan. The budget of each programme will balance to the budget as approved by the provincial parliament. We will also develop a monitoring mechanism that will give early warning in terms of the success or otherwise of the projects, and ensure that for each project there is a commensurate business plan with requisite approvals from the acting accounting officer. In the short term, we have centralised all procurements and payments to our head office at Cedara. Although there may be some delays, we do however need to ensure that the payments we make are as a consequence of a proper procurement process and that payments made thereon are in keeping with the provisions of the law. Since joining this department I have been really surprised that government departments can overspend and not be in a position to explain themselves. As mentioned previously, we will use proper business planning processes to ensure that we keep within the approved budgets for projects. In cases where there is a need to reprioritise projects, we give an undertaking that there will be commensurate budgets at all times.
Turnaround strategy In keeping with the requirements of the provincial Treasury, a steering committee that is an intervention team has been established to oversee the activities that will lead to the turnaround of my department. This committee will, among other things, monitor progress on the intervention; evaluate and advise the acting head of department on line function requests that he cannot finalise; approve revised budget allocations resulting from the intervention; provide guidance on organisational structure and staffing issues, and make recommendations to the executing authority; ensure that service delivery on approved projects takes place within prescribed rules and regulations; consider any other matters requested by the acting HOD; and report progress to the executive on a regular basis.
Since the appointment of the intervention team, a number of actions have already taken place. These include: the blocking of all transaction authorities on basic accounting systems while taking over the systems’ control functions; informing suppliers of possible delays in payments; withdrawal of all order books in the department and the blocking of all electronic order facilities; clearing the backlog of payments and suspense accounts; recovery of outstanding advances from employees; identification of areas requiring financial assistance and appointment of service providers where necessary.
A moratorium on the filling of posts has been implemented and a new procedure for the unfreezing of essential posts has been developed. Inefficiency and lack of capacity hamper service delivery. We are ridding this department of this ill. As MEC of this department, I wish to say that I would rather remain alone with completely new staff than accommodate and tolerate any semblance of fraud and corruption. I would like to give warning to my staff that I want to see a change in attitude towards work and towards other staff members. – Lloyd Phillips
