National Skills Fund Update: Investigations, Audit Outcomes, and Human Resource Management
The National Skills Fund provides an update on investigations conducted by the Directorate for Priority Crime Investigation, historical and current audit outcomes, and human resource management actions. The ongoing investigation by the DPCI (HAWKS), internal disciplinary processes, audit action plan analysis, and outcomes such as financial statements and compliance are detailed. The NSF's 2022/23 financial year received a qualified audit opinion. Progress on cases, disciplinary actions, and corrective measures are highlighted, emphasizing the importance of accountability and compliance in skills development.
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NATIONAL SKILLS FUND UPDATE TO SCOPA Date: 07 February 2024
2 1. UPDATE ON INVESTIGATIONS CONDUCTED BY THE DIRECTORATE FOR PRIORITY CRIME INVESTIGATION (HWKS) & INTERNAL DISCIPLINARY PROCESSES 2. HISTORICAL AUDIT OUTCOME 3. CURRENT YEAR AUDIT OUTCOME 2022/23 CONTENTS 4. AUDIT ACTION PLAN (AAP) Analysis of findings Material v Non-material findings Progress status Common root causes Corrective actions Quality review Way forward 5. HUMAN RESOURCE MANAGEMENT
3 1. DPCI(HAWKS) INVESTIGATION & During the last SCOPA session, the NSF reported that the DPCI was collection for a determination to prosecute. Since then, the DPCI through the Captain assigned to the case informed the NSF of the following progress: 1. The investigation still ongoing. INTERNAL DISCIPLINARY 2. Witness statements have been obtained . 3. Bank statements have been submitted for analysis. 4. The NPA is aware of the progress on this case and a decision will be made once the analysis of bank statements is completed. PROCESSES Furthermore, during the last SCOPA session, the NSF reported on the unfolding of the internal disciplinary process wherein: 1. Six officials were placed on precautionary suspension in October 2022 (5) and November 2022 (1) on various charges. 2. Further investigation absolved 2 officials as no concrete implicating evidence was found and their suspensions were lifted in July 2023. 3. One junior official entered into a plea bargain and paid R7220. 00 with a written warning. 4. Another junior official who by association was implicated in wrongdoing was sanctioned one month without pay. 5. One senior official was outrightly dismissed and subsequently filed an appeal. 6. Separate disciplinary hearings of two senior management (SMS) officials at Director levels are ongoing, respectively. 7. Arising from one of the hearings above, another senior official (SMS) Director level was implicated to whom the right of reply was afforded. The accelerator to obtaining criminal convictions and sanctions on both the skills development providers and officials will be determined by the outcome of the DPCI investigation.
Outcome area Movement 2022-23 2021-22 2020-21 Audit outcome analysis 4 [ Financial statements 1. Financial statements Improved audit come from the historic disclaimer of opinion (2020/21) Substantial reduction in audit findings Required enhancement of internal control 2. Annual performance report Improved audit come from the historic disclaimer of opinion (2021/22 and 2020/21) Substantial reduction in audit findings Required enhancement of internal control AGSA selected two programmes in 2022/23 (for noting) Annual performance report 2. HISTORIC AUDIT OUTCOME Programme 2 Skills development funding Programme 3 PSETsystem improvement funding Not audited in the prior year Not audited Not audited Compliance with legislation Annual financial statements, performance reports and annual reports Expenditure Management Asset Management Strategic planning and performance management Procurement and contract management Consequence management 3. Compliance Reduction in material non-compliance Required enhancement of compliance control environment Qualified Adverse Disclaimed Unqualified / No material findings Material findings Regression Improvement Unchanged
5 The National Skills Fund (NSF) received a qualified audit opinion for the 2022/23 financial year. Basis for qualification are : 3. C/Y AUDIT OUTCOME Skills Development Funding Auditors were unable to obtain sufficient appropriate audit evidence that skills development funding for the current and previous year has been properly accounted for, as evidence that services had been received could not be provided. Provisions (related to skills development funding) NSF did not have adequate systems in place to account for provisions from skills development funding in accordance with GRAP 19, Provisions, contingent liabilities, and contingent assets as the provisions were not calculated correctly. As much as this is not the desired outcome, it is worth noting the improvements; AOPO moving from a disclaimer to a qualified audit opinion. Substantial decrease of audit findings from a total of 58 audit findings in 2021/22 to 30 in 2022/23. A consolidated Audit Action Plan (AAP) has been developed to address the root causes for each audit finding and keep track of the corrective actions. Implementation of the AAP will result in improved organizational effectiveness, efficiency, and performance, ultimately leading to an improved audit outcome.
6 Units Total Findings % contribution Audit Findings 2022/23 Audit CFO 9 30% SIOP 10 33% 4. AUDIT ACTION PLAN SDI 9 30% Legal 1 3% 30% 30% HRM 1 3% Total 30 100% Impact 3% SDI and Finance had material findings contributing to the qualification on the AFS SDI and SIOP had material findings contributing to the qualification on the APR Other units did not have material findings 3% 33% CFO SIOP Legal HRM SDI
7 Material Findings per Unit MATERIAL FINDINGS RESPONSIBILITY COUNT Chief Financial Officer (CFO) 4 AUDIT ACTION PLAN Chief Director: Strategy, Innovation and Organizational Performance (SIOP) Chief Director: Skills Development Implementation (SDI) Total 4 7 16 Other Findings per Unit OTHER FINDINGS (NON-MATERIAL FINDINGS) RESPONSIBILITY Chief Financial Officer (CFO) Chief Director: Strategy, Innovation and Organisational Performance (SIOP) Chief Director: Skills Development Implementation (SDI) COUNT 5 6 1 Director: Legal, Governance, Risk and Compliance (LGRC) Director: Human Resource Management (HRM) Total 1 1 14 In total there were 30 findings raised by AGSA.
Highlight of the Material Audit Findings 8 UNIT HIGHLIGHT OF MATERIAL AUDIT FINDINGS IMPACT - Provisions - Deferred Expenditure - Trade and other receivables from non-exchange transactions - Consequence management AUDIT ACTION PLAN Qualification of the AFS (disagreement and limitation) Non-compliance with legislation FINANCE UNIT SKILLS DEVELOPMENT IMPLEMENTATION Findings are related to the unavailability of supporting documents and inadequate supporting documents Qualification of the AFS (disagreement and limitation) AOPO reliability findings Programme 2 AOPO reliability Programme 3- Overstatement of achievements Programme 3 AOPO reliability Qualification on the APR (disagreement and limitation) STRATEGY,INNOVATION AND ORGANISATIONAL PERFORMANCE
Material Audit Findings 9 MATERIAL FINDINGS COUNT NOT YET STARTED RESPONSIBILITY COUNT COMPLETED IN PROGRESS Chief Financial Officer (CFO) Chief Director: Strategy, Innovation and Organisational Performance (SIOP) 4 1 3 - 4 4 - - Chief Director: Skills Development Implementation (SDI) 8 5 3 - Total 16 10 6 - PROGRESS STATUS 0% Implementation of corrective actions is completed for ten (63%) of the material audit findings. 38% Implementation of corrective actions is in progress for six (38%) of the material audit findings. The corrective action plans aim not only to resolve the identified audit finding but also to enhance internal controls, preventing the reoccurrence of such findings. 63% COMPLETED IN PROGRESS NOT YET STARTED
Non-Material Audit Findings 10 OTHER FINDINGS COUNT NOT YET STARTED RESPONSIBILITY COUNT COMPLETED IN PROGRESS Chief Financial Officer (CFO) 5 1 4 - Chief Director: Strategy, Innovation and Organisational Performance (SIOP) 6 4 2 - Chief Director: Skills Development Implementation (SDI) 1 - 1 - Director: Legal, Governance, Risk and Compliance (LGRC) 1 - 1 - PROGRESS STATUS Director: Human Resource Management (HRM) 1 - 1 - Total 14 5 9 - Implementation of corrective actions is completed for five (36%) of the material audit findings. 0% Implementation of corrective actions is in progress for nine (64%) of the material audit findings. 36% Progress on HRM finding: The file was submitted to the AGSA during the audit but NSF need to enhance record keeping. Progress on LGRC finding: Service provider was appointed for BBBEE verification and the finding will not re-occur. 64% The corrective action plans aim not only to resolve the identified audit finding but also to enhance internal controls, preventing the reoccurrence of such findings. COMPLETED IN PROGRESS NOT YET STARTED
Total Audit Findings from the 2022/23 audit 11 NOT YET STARTED - RESPONSIBILITY Chief Financial Officer (CFO) Chief Director: Strategy, Innovation and Organisational Performance (SIOP) COUNT 9 COMPLETED 2 IN PROGRESS 7 10 8 2 - Chief Director: Skills Development Implementation (SDI) 9 5 4 - Director: Legal, Governance, Risk and Compliance (LGRC) 1 - 1 - PROGRESS STATUS Director: Human Resource Management (HRM) Total 1 - 1 - - 30 15 15 0% In total, fifteen (50%) findings have been completed and fifteen (50%) are in progress. It should be noted that most of the remaining findings relates to the matters identified on the financial statements. 50% 50% NSF continues to produce financial statements on the quarterly basis. Interim financial statements will be subject to both internal and external audit (AGSA). COMPLETED IN PROGRESS NOT YET STARTED
12 COMMON ROOT CAUSES FOR AUDIT FINDING Capacity constraints throughout the organization. Lack of integrated automated system. Manual Commitment Schedule system resulting in inadequate financial reporting and errors due to the lack of an integrated and interfaced Fund Management with Finance IT system. AUDIT ACTION PLAN Inadequate project monitoring and expenditure approval process. Unavailability of sufficient appropriate audit evidence that skills development funding for the current and previous year has been properly accounted for. Overstatement of reported performance information Lack of supporting documents for the reported performance information
13 CORRECTIVE ACTIONS Fast track the appointment of critical posts in particular the senior management posts. AUDIT ACTION PLAN Appoint additional project management support personnel on a contract basis to assist with the review of underlying source documents. Provide training to the project management teams. Operationalise and capacitate the SDI Quality Assurance function to conduct proactive reviews on the validity and completeness of underlying source documents stored on all Directorate OneDrive's. Appointment of project management consultants to assist with the backlog of all key project management activities and transfer of skills to the project managers. Fast tracking the discussions with Sage Pastel Service Provider to enhance the SAGE Pastel System for an Automated Commitment Schedule.
14 QUALITY REVIEW 1. The Internal Audit (IA) Unit has reviewed the AAP, the review included the following; Reviewing responses/action plans of the relevant departments to ascertain whether they address the AUDIT ACTION PLAN findings and root causes. Testing the completeness of action plans to AGSA Management report to ensure that all findings are included in the action plans. Evaluating if action plans are allocated to the appropriate Chief Directorate and/or Directorate. Evaluating the adequacy of timelines allocated to address root causes and whether it will result in improved internal controls throughout the 2023/24 financial period vs. year-end implementation only. 2. The IA (Unit) will also provides assurance on status of action plans as reported by management.
15 WAY FOWARD NSF Finance coordinates the Audit Action Plan (AAP) for the 2022/23 findings. Directorate: Financial Planning and Reporting continues to monitor and track the implementation and progress AUDIT ACTION PLAN of the corrective actions. The IA (Unit) also provides assurance on status of action plans as reported by management.
5. Human Resource Management 5. Human Resource Management 16
17 200 Total of 179 posts approved as per NSF Organisational Structure 179 179 179 180 VACANCY COMPARATOR 160 129 posts filled to date equating to a reduced vacancy rate from 41% (21/22) to 28% (23/24) year to date. 140 131 129 120 106 2021/22 VS 2022/23 100 80 73 Change due to attrition during 23/24 resulting in 50 vacant posts, of which 48 were advertised. 60 50 48 40 20 0 Approved Filled Vacant 23/24 22/23 21/22
18 Progress Number % contribution 41 . Verification 19 RECRUITMENT PROGRESS Shortlisting 5 8 21% Interview 6 13 Submission 8 17 OF 48 VACANT POSTS Appointed 10 21 41% TOTAL 48 100 Explanation Forty-eight (48) advertised vacancies at various stages in the recruitment process. 17% Ten (10) have been approved and eight (8) at submission stage awaiting approval. Potential 18 to be placed by end 23/24. 13% 8% Thirty (30) still being processed as outlined above. Verification Shortlisting Interview Submission Appointed
19 30 25 SMS posts approved as per NSF Organisational Structure SMS POSTS AND VACANCIES 25 25 25 Recruitment of 14 SMS posts being tracked from 2022 to date. 25 20 1 appointed in Jan 24, 2 currently at submission stage, 6 interviews and 1 at shortlisting scheduled during Feb 24. 14 15 13 13 12 12 11 10 5 0 Approved Filled Vacant 23/24 22/23 21/22
20 TRACKING OF VACANT SMS POSTS: DIRECTORATE STATUS TO Of 5 Finance posts, 2 appointed, 1 at submission stage, and 2 scheduled for interview. EO OFFICE, 1 SIOP, 3 5 SDI posts advertised, 1 scheduled for shortlisting and 4 scheduled for interviews. FINANCE, 5 3 SIOP posts, 1 appointed and 2 scheduled for shortlisting. SMS POSTS PER SDI, 5 Post in office of EO at submission stage. EO OFFICE FINANCE SDI SIOP DATE
14 SMS POSTS - RECRUITMENT STATUS NAME OF POST NAME OF POST DIRECTORATE DIRECTORATE NO OF POSTS NO OF POSTS STATUS STATUS Executive Officer (new) EO 1 Submission stage Chief Financial Officer FINANCE 1 Appointed Director: Financial Management and Administration FINANCE 1 Appointed Director: Financial Planning, and Reporting FINANCE 1 Submission stage Director Fund Management (new) FINANCE 1 Interview stage Director: Supply Chain Management (new) FINANCE 1 Interview stage Chief Director: Skills Development Implementation SDI 1 Shortlisting stage Director: Programme Monitoring SDI 1 Shortlisting stage (on hold) Director: Regional SDI - EC SDI 1 Interview stage Director: Regional SDI SDI 1 Being used to pilot QA unit Director: Regional SDI WC/NC SDI 1 Interview stage Interview stage Director: ICT SIOP 1 Appointed Director: Organisational Performance and Reporting SIOP 1 Interview stage Director: Strategy, Partnerships and Innovation SIOP 1 Interview stage 14 14
22 ADDITIONAL CAPACITY To assist with capacity challenges, 99, 12-month contract posts additional to the NSF establishment and across various units were approved and advertised. Of these, 14 at submission stage, 21 interviews scheduled, 62 short listings scheduled and 2 at verification stage. In addition, 9 DHET officials were identified for secondment to the NSF for 12 months in the SDI, SIOP and HR units. These staff were seconded in August 2023. The HR team has also processed recruitment to secure 121 interns, of which 115 are now in place since Sept/ Oct 23. Work on implementing MTT recommendations on NSF organisational structure is currently underway.
POSTS APPOINTED 2022/23 PER DIRECTORATE POSTS APPOINTED/TO BE APPOINTED NAME OF POST DIRECTORATE NO OF POSTS NAME OF POST DIRECTORATE NO OF POSTS 4 Assistant Director: Bursaries Monitoring BURSARIES 3 Administrative Officer: Assets FINANCE 1 Snr Practitioner: Bursaries (Start date: 01 May 2023) BURSARIES 1 Assistant Director: Budget & Treasury FINANCE 1 Chief Financial Officer FINANCE 1 18 Assistant Director: Regional SDI - KZN SDI 1 Deputy Director: Assets and Facilities FINANCE 1 Assistant Director: Regional Skills Development Implementation Limpopo and Mpumalanga Region SDI 2 Deputy Director: Fund Management (X3 Posts) FINANCE 3 13 Assistant Director: Regional Skills Development Implementation: Eastern Cape Region (3X Posts) SDI 3 Director: Fund Management FINANCE 1 Assistant Director: Accounting 1 x (Awaiting acceptance of new offer) and 1 x submission on route Practitioner: Finance FINANCE 2 Deputy Director: Regional SDI - KZN and EC SDI 2 Assistant Director: Regional SDI WC (Start date: 01/04/23) SDI 1 FINANCE 1 Practitioner: Registry (X2 posts) FINANCE 2 Assistant Director: Initiation and Evaluation (Start: 01/04/23) SDI 2 Assistant Director: HR Operations HR 2 Deputy Director: Regional SDI: GP, NW and FS SDI 2 Assistant Director: Talent and Performance Management and Operations Assistant Director: Training and Development Operations HR 1 Senior Practitioner (X2 Posts) SDI 2 5 Senior Practitioner: SDI: Western Cape Regional Office SDI 1 HR 1 Senior Practitioner : Gauteng, North-West and Free State Regional Office SDI 2 Deputy Director: HR Management HR 1 Deputy Director: Legal, Governance, Risk and Compliance LEGAL 1 3 Secretary to CD: SIOP (Start date: 01/04/23) SIOP 1 Assistant Director: Business Analytics SIOP 1 Senior Practitioner: Secretariat LEGAL 1 Deputy Director: Business Data Management SIOP 1 Administrative Assistant LEGAL 1 7 Deputy Director: Enterprise Architect SIOP 1 Deputy Director: Public Relations and Communication OEO 1 1 Deputy Director: Strategy, Workplace Based Learning SIOP 2 Director: ICT SIOP 1 51
2023/24 POSTS APPOINTED TO DATE POSTS APPOINTED FROM 1 APRIL 2023 TO DATE NAME OF POST DIRECTORATE NO OF POSTS Director: Financial Planning, and Reporting FINANCE 1 Assistant Director: Initiation and Evaluation SDI 2 Assistant Director: Regional SDI WC SDI 1 Secretary to CD: SIOP SIOP 1 Administrative Assistant LEGAL 1 Assistant Director: Bursaries Monitoring BURSARIES 3 Senior Practitioner: Bursaries BURSARIES 1 10 Much time in Q1 and Q2 of 2023 has been spent processing recruitment of interns as well as the 99 contract posts additional to the NSF Structure. This as well as lack of availability of panel members within the NSF due to various other commitments including AG processes, has resulted in slower pace of filling of permanent posts to date than expected.
CONCLUSION During 2022/23, 51 posts were filled At the close of 2022/23, 48 advertised vacancies existed in the NSF In 2023/24 to date, 10 of these vacancies have been filled, leaving 38 existing vacancies, of which 8 are at the final stage of appointment (submission stage) and 30 still being processed. Therefore from 2022 year to date, 61 posts have been filled within the NSF. There has also been staff movements 2023/24 to date with respect to resignations and internal promotions.
POSTS CURRENTLY AT VERIFICATION STAGE POSTS AT VERIFICATION STAGE POSTS AT VERIFICATION STAGE NO OF POSTS NO OF POSTS NAME OF POST DIRECTORATE NAME OF POST DIRECTORATE EO OFFICE 1 Executive Assistant Assistant Director: Supply Chain Management FINANCE 1 FINANCE 1 Deputy Director: Fund Management SDI Senior Practitioner/Admin Assistant (CD Office) 1 FINANCE 1 ASD: Assets and Facilities SDI Administrative Assistant (CD office) 1 FINANCE 1 ASD: Enterprise Document Management SDI Assistant Director (LP/MP) 1 FINANCE 1 Receptionist SDI Assistant Director (WC/NC) 1 Administrative Assistant HR 1 SDI Assistant Director (EC/KZN) 2 Practitioner HR 2 SDI Senior Practitioner (Bursaries) 2 TOTAL TOTAL 19 SIOP Assistant Director: ICT 1 Legal Administrative Officer LEGAL 1
POSTS CURRENTLY AT SHORTLISTING & INTERVIEW STAGE NAME OF POST DIRECTORATE NO OF POSTS Chief Director: Skills Development Implementation SDI 1 Director: Programme Monitoring (on hold) SDI 1 Director: Regional SDI (being use in QA unit pilot) SDI 1 Deputy Director: Initiation and Evaluation SDI 1 Deputy Director: Financial Planning and Reporting (Treasury) FINANCE 1 5 INTERVIEW STAGE NAME OF POST DIRECTORATE NO OF POSTS Director: Regional SDI (EC) SDI 1 Director: Regional SDI (WC/NC) SDI 1 FINANCE 1 Director Fund Management FINANCE 1 Director: Supply Chain Management SIOP Director: Strategy Partnership and Innovation 1 SIOP Director: Organisational Performance & Reporting 1 6
POSTS CURRENTLY AT SUBMISSION STAGE NAME OF POST DIRECTORATE NO OF POSTS Assistant Director: Public Relations and Communication PR & Comms 1 Director: Financial Management and Administration FINANCE 1 Assistant Director: Accounting (x2 posts) FINANCE 2 Assistant Director: Revenue FINANCE 1 Deputy Director: Regional SDI WC/NC (advertised 2022) SDI 1 Deputy Director: Regional SDI WC/NC (advertised 2023) SDI 1 Snr Practitioner: Skills Development Implementation (EC & KZN) SDI 1 8
