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Author Topic: Services SETA was under administration in July 2013

Posts: 85
Services SETA was under administration in July 2013
on: August 9, 2014, 07:37

The Services SETA was under administration in July 2013 after being under administration for two and a half years. The main reason for that SETA being placed under administration was the costliness of its achievements. For example, one year’s learning for one learner cost more than three years of university education. The audit report for 2012/13 showed R292m could not be accounted for.

Posts: 85
Re: Services SETA was under administration in July 2013
on: August 9, 2014, 07:40

Services SETA presentation
Mr Themba Mhambi, Chair of the Accounting Authority (Board) of the Services SETA said that the SETA had been under administration for two and a half years (to July 2013), after which the Board had been established. The main reason for the SETA being placed under its administration was the costliness of its achievements. For example one year’s learning for one learner cost more than three years of university education. Mr Mhambi said he had been an administrator for 22 other entities and the recent administration had faced the following challenges:

▪ Paralysis of investigations, combined with neglect of day to day processes
▪ External focus on international activities
▪ A highly skilled workforce which was not well utilised
▪ Poor record keeping
▪ Combined accounting and executive functions, which rendered the Chief Executive Officer accountable to himself.

Mr Mhambi gave an overview of the Auditor-General’s 2012/13 audit report. R292m could not be accounted for. Projects prior to July 2013 would be subject to scrutiny and a validation exercise undergone. There were significant uncertainties regarding lawsuits and all legal matters on the books were being independently reviewed by a contracted legal practitioner. In response to the Auditor-General finding of ‘restatement of corresponding figures resulting from errors in financial statements’ interim financial statements are prepared and reviewed by the Audit Committee to monitor progress monthly. With regard to the finding of irregular expenditure, deviations instead of condonations within the parameters of Treasury Regulations and Procurement Policy were applied. Supply Chain Management (SCM) was subject to a complete review of previous practices and appropriate action was taken. Financial misconduct was being investigated and matters concerning the previous executive and senior management were with the Hawks. One criminal investigation had resulted in an R80 000 fine and a suspended sentence but others were ongoing. A whistle blower who had sent anonymous emails was also being investigated for not following the proper channels. Fictitious learners were being investigated.

The Chief Executive Officer, Mr Johannes Mouton, gave an overview of core programmes audited. The Services SETA had aimed to increase the number of employers that submitted Workplace Skills Plans (WSPs) and Annual Training Reviews (ATRs) by 25% but had achieved an 18% increase. 27% of employers who received mandatory grant reimbursements did not submit WSPs and ATRs and the target had been 0%. The target for recognition of prior learning (RPL) was significantly overachieved (2000 against a target of 200). A backlog of certificates that had not been awarded had mostly been cleared. All learners were now linked to an identity number, employer, service provider (SP) and training qualification. The top and mid management vacancy rate was highest. There was now a paper trail linking any activities to expenditure.

Ms N Gina (ANC) was concerned about how the Committee should best play its oversight role. The last presentation by the SETA had been convincing about change and she was apprehensive about further disappointment. She said that an R80 000 fine sounded good but what was it balanced against?

Mr S Makhubele (ANC) reiterated the previous point. The fine for stealing a cow was R2000 but a cow could be sold for R10 000. He believed that the SETA situation had not changed and that, as a juristic person, the Chair of the Board should be blamed. Expenditure of R290m without records was a very large sum. Loopholes, not only in SCM but in top and middle management had to be dealt with. The administrator should not be seen as a messiah and it was believable that there was collaboration with the Department. He would like to know more about how 2000 learners were awarded RPL certificates, as a model of best practice.

Ms D Chili (ANC) said that the Auditor-General’s material finding was that 64% of targets were not well defined. There was no value for money, so why was a consultant used?

Mr A Mpontshane (IFP) hoped that the presentation was not a display of ineffective good intentions. Regarding skills transfer and fictitious learners, he had attended a graduation ceremony for young people who had been through learnerships. One could sense that the graduates had no hope of finding employment but the service provider benefited. What was the extent of the problem of fictitious learners, financially and numerically? Regarding irregular expenditure, he noted that the Auditor-General had decried the lack of sanctions.

Prof A Lotriet (DA) said that a new Board and CEO having to answer questions was problematic. She noted that when the SETA was under administration, the administration emolument was over R3m. How did that happen and why was there an increase in overseas travel when the SETA was under administration? She would like feedback on implementing a plan to correct the findings.

Mr S Radebe (ANC) wanted to know if the figure of 11 327 certificates issued between May 2013 and February 2014 included the 11 000 backlog. He noted that with Skills Development Programmes (SDPs), sometimes oversight visits revealed no students on the ground.

How was it possible for important legislation and regulations to be overlooked in Supply Chain Management (SCM)? The Department should be blamed for not monitoring the SETA adequately. The Board should be blamed for not getting on top of the situation. Someone should be arrested if the administrator painted a good picture that turned out to be false. He asked the CEO how long it would take to turn the situation around. If he was called by the Committee in, say, September would the situation be different?

The Chairperson also hoped that the presentation was not a list of good intentions. The Department was a ‘sleeping policeman’ and would have to answer. The Committee wanted a written report with a timeline on how it was remedying the situation.

The Chair of the Board, Mr Mhambi, responded that his Board was excellent. It was unnecessary for them to vote as they reached consensus. Two other SETAs for which he had been the administrator were now functional. With respect to sanctions against financial misconduct, one executive member had been found guilty of taking money but the sanction was not yet known. They were not just taking a stance, they were taking action.

The number of fictitious learners was unknown. Each and every learner would have to be phoned to have his/her details verified.

Administration costs included travel, accommodation etc and might be justifiable. Details had been requested but the principle of innocent until proven guilty had to be upheld.

Irregular expenditure would not be condoned. Any deviations would have to be approved by the Board.

Overseas travel was necessitated due to partnerships, some of which was justifiable.

In terms of overall progress and timelines to address the Auditor-General’s findings, they would report on this regularly. The next audit report would be better than the most recent one and it would be clean by 2014/15.

The SCM system was being revamped but was constrained by lack of skills. In the past the CEO and Chief Operating Officer had been the same person, and should not have been.

Mr Johannes Mouton, CEO, said that RPL was an important strategic objective and discretionary grants were targeted there. 121 companies assisted.

By May, the critical issues would have been identified and prioritised. Every three months there were important deliverables and by September much would have improved.

Ms Debbie Machard, Quality Assurance manager, said that the backlog of certificates had been investigated and ringfenced. They had had to improve business processes and understand financial figures retrospectively. They knew numbers of students, providers and geographical areas and would send audit companies to those learners to disburse certificates. Untraceable learners’ certificates would be archived. Current staff did not get sidetracked by dealing with ‘legacy’ certificates. They knew turnaround times and performance indicators and were achieving them.

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