DEPARTMENT OF ENVIRONMENTAL AFFAIRS AND TOURISM

1
DEPARTMENT OF ENVIRONMENTAL AFFAIRS AND
TOURISM REPORT TO THE SELECT COMMITTEE ON THE
MRLF ANNUAL REPORTS FOR 2002 to 2005
AND 2005/2006 30 JANUARY 2007
2
VISIONTO BE A PROSPEROUS AND EQUITABLE SOCIETY
LIVING IN HARMONY WITH OUR NATURAL
RESOURCESMISSIONTO LEAD SUSTAINABLE
DEVELOPMENT IN THE ENVIRONMENT AND TOURISM SECTOR
FOR A BETTER LIFE FOR ALL
3
BACKGROUND

• The Marine and Living Resources Fund (MLRF) was
  established in terms of the Marine Living
  Resources Act (MLRA) of 1998
• MLRF was listed as a Public Entity in 2001
• The fund must generate its own revenue
• The main sources of income are from levies on
  fish products license fees and permits, fines
  and confiscations, harbour fees transfers from
  DEAT
• Personnel expenditure is funded by the vote of
  the department

4
ANNUAL REPORT 2002 - 2005

• SUMMARY OF ACHIEVEMENTS
• 9 new fisheries sectors over 5 years
• Planning for Long-term rights allocations
  (LTRAMP) both policies and procedures
• Planning for expansion of the countrys Marine
  Protected Areas (MPAs)
• Amended regulations for the control of use of
  vehicles in the coastal zone
• Blue Flag beaches piloted
• Programme to halt illegal developments on the
  coastline initiated

5
ACHIEVEMENTS 2002/5 (CONT)

• National Contingency Plan for the Prevention and
  Combating of Pollution from Ships developed in
  partnership with SA Maritime Safety Dept
  Transport
• Took delivery of 2 new protection vessels
  (Lillian Ngoyi Sarah Baartman) commissioned a
  further 2 vessels
• Benguela Current Large Marine Ecosystem (BCLME)
  project launched
• African Journal of Marine Science published

6
Office of the CFO (Challengers) - 2002-2005

• Revenue into the Fund has been erratic over the
  2002,2003 and 2004 years.
• Operating expenses increased significantly.
  Annual increases for 2003, 2004, and 2005) have
  been 25, 27 and 50 respectively.
• Cost control has been historically poor.
• Debtors increased significantly.
• No proper budgeting or budget control process.
• General accounting principles and practices not
  adhered
• Reconciliations not performed.
• Lack of supporting documentation.
• Inconsistencies between cash and accrual
  accounting methods.
• There was no Financial System in place or Proper
  Cash Management.
• Staff were not properly skilled and guided.

7
MARINE LVIVING RESOURCES FUND ANNUAL REPORT FOR
2005/2006 30 JANUARY 2007
8
Spending Trends 2005-2006

• Fund must generate its own revenue Biggest
  source of revenue is levies charged on fish and
  fish products.
• Vessel Costs for the year R101 million 35 of
  the fund expenditure.
• DEAT Transferred R501 million for the purchase of
  4 new compliance vessels 2 commissioned in
  2004/05 and remainder 2 delivered in 2005/06.
• R38 million is being transferred over the period
  2004- 2007 for the Langebaan Coastal Erosion
  project.
• R108 million has been allocated for the
  replacement of the research vessel Sardinops
  Delivery March 2007.

9
Spending Trends 2005-2006 (cont..)

• Government Grants transferred from DEAT - 2005/06
  - R93 million
• R25m Vessel operating cost
• R33m Procurement of research vessel
• R14m Langebaan coastal erosion
• R21m Financial assistance
• R45 million went towards the LTRAMP process.
• Personnel expenditure is funded by the vote of
  the department.
• Revenue generated as at 31 March 2006 R259
  million.
• Total expenditure for the year R375 million.

10

• CHIEF DIRECTORATE RESOURCE MANAGEMENT
• PURPOSE
• Facilitate sustainable equitable use of marine
  coastal resources
• Regulating the utilisation of marine resources
  through the administration of fishing rights,
  permits licenses
• Stimulating economic growth restructuring of
  the fishing industry

11
ACHIEVEMENTS

• General Fishing Policy approved by Cabinet
• 20 Fishery specific policies developed
  (target20)
• Consulted 9000 fishing stakeholders on policies
• New model for determining application fees for
  long-term fishing rights developed introduced a
  sliding scale of fees linked to value of the
  fisheries
• Allocation of long-term rights in 20 fisheries
  (target20)
• CHALLENGES
• Complexity of resolving appeals i.t.o. long-term
  allocations
• Allocation of rights in the subsistence and small
  scale fisheries limited understanding of these
  sectors

12
CHIEF DIRECTORATE MONITORING, CONTROL
SURVEILLANCE

• PURPOSE
• Preventing and eliminating illegal marine
  activity
• ACHIEVEMENTS
• Strengthening of EPV fleet through delivery of 2
  more inshore vessels (Ruth First Victoria
  Mxenge) fleet of 5
• SADC/regional cooperation through 1 patrol to
  Marion Island and 2 patrols to Tanzanian
  Mozambique
• 171 Fisheries Control Officers at 31 compliance
  stations conducted ongoing patrols inspections

13
ACHIEVEMENTS (CONT)

• 5 Memorandums of Understandings signed to
  increase compliance capacity
• Provision of 2 full time prosecutors for the
  Environmental Court in Hermanus
• CHALLENGES
• Financial costs of operating the compliance
  vessels
• Ongoing need to recruit and train compliance
  staff
• Organised nature of poaching

14
CHIEF DIRECTORATE INTEGRATED COASTAL MANAGEMENT

• PURPOSE
• Managing human impacts on the marine coastal
  environment through
• Regulating coastal developments
• Regulating marine pollution
• Promoting marine ecotourism mariculture
• Managing marine protected areas (MPAs)
• ACHIEVEMENTS
• Draft aquaculture policy
• Promulgation of 4 new MPAs (Stilbaai, Kei, Gxulu
  Gonubie) target6

15
ACHIEVEMENTS (CONT)

• Designation of S.As southern continental shelf
  waters as Special Area by the International
  Maritime Organisation (protection for seabirds
  against oil pollution)
• Consensus on the Coastal Management Bill
• 20 local beaches awarded Blue Flag status
• CHALLENGES
• Difficulty in reaching consensus delayed passage
  of the Coastal Management Bill

16
CHIEF DIRECTORATE RESEARCH, ANTARCTICA ISLANDS

• PURPOSE
• Provision of advice on the sustainable
  utilisation of marine and coastal resources by
  carrying out appropriate research
• Providing infrastructural support for S.As
  research in the Southern Ocean and Antarctica
• ACHIEVEMENTS
• Ongoing research/surveys on state of fish stocks
  (6 cruises)
• Recommendation of TACs TAEs in 18 species
  (target18)
• BCLME collaboration on predator-prey
  relationships by-catch

17
ACHIEVEMENTS (CONT)

• Marion Islands research facility construction 70
  complete.
• Completed feasibility study to replace SA
  Agulhas.
• Made progress towards replacement of the
  Sardinops.
• Successfully completed Marion and Gough Island
  expedition Antarctic Relief Expedition.
• AJMS published online.

18
CHALLENGES

• Recruitment retention of scientists,
  particularly black scientists
• INTERNATIONAL RELATIONS
• Ongoing positive relations and cooperation with
  partners (Norway, Australia and new Zealand)
• Signing of South East Indian Fisheries
  Organisation (SEAFO)
• Ongoing honouring of regional international
  obligations

19
Demographics - Branch
Pink- Indians, Green Africans Yellow-
Coloureds, Blue- Whites
20
Office of the CFO - TARGETS FOR 2005-2006

• Render effective and efficient financial
  management for the MLRF.
• Complete and sign of Audits for 2002 to 2005 and
  publish Annual Report.
• Skills capacity and staffing issues to be
  addressed.
• Take over accounting function from Consulting
  firm.
• Commission the development of a new integrated
  financial and procurement system.
• Commission the development of a Cost Recovery
  Framework for the Fishing industry.
• Develop a portal for all database systems.
  (MAST)
• Prepare a budget for 31 March 2006. - Ensure
  correct MTEF submission to Treasury
• Ensure compliance to all regulations (PFMA,
  Treasury Regs, SCM, GRAP).
• Ensure all revenue due to the fund is collected
  timeously.
• Balance income and expenditure whilst providing
  public good services.
• Appoint Internal Auditors for the fund.
• Set BEE procurement spending target at 47.

21
ACHIEVEMENTS

• Appointed a full-time CFO
• Completed 4 years of audits and published annual
  report.
• Appointed a consortium to develop a cost recovery
  framework.
• Trained all staff in 1st phase damelin accrual
  accounting.
• Took over financial function from consulting
  firm.
• Appointed debt collectors.
• Instituted legal action against previous
  developers of the failed financial system
• Submitted treasury reports timeously.

22
ACHIEVEMENTS

• Appointed NDT to develop and implement an
  integrated financial and procurement system for
  the fund.
• Institutional design approval 3 directors in
  office of the CFO.
• Appointed a consortium to develop a cost recovery
  framework for the fund.
• Monthly management reports produced, costs
  brought under control.
• Control measures implemented for better managing
  of MLRF resources.

23
IMPLEMENTATION CHALLENGES AND/OR RISKS

• Managing limited cash resources.
• Lack of historical data for debtors.
• Limited skills and internal capacity.

24
MARINE LIVING RESOURCES FUND ANNUAL FINANCIAL
STATEMENTS 31 March 2002 31 March 2003 31 March
2004 31 March 2005 31 March 2006
25
INCOME STATEMENTS
26
BALANCE SHEETS
27
AUDITOR-GENERAL REPORTS

•   

• 31 March 2002 - Qualified Audit Opinion
• 1 x Qualification
• 4 x Emphasis of Matter
• 31 March 2003 - Qualified Audit Opinion
• 2 x Qualifications
• 8 x Emphasis of Matter
• 31 March 2004 - Disclaimed Audit Opinion
• 5 x Qualifications
• 7 x Emphasis of Matter
• 31 March 2005 - Disclaimed Audit Opinion
• 2 x Qualifications
• 5 x Emphasis of Matter

28
AUDITOR-GENERAL REPORT (cont..)

•   

• All 4-years reports lead to the following-
• Lack of Internal Control
• Lack of compliance to the PFMA
• No proper accounting and fixed asset system
• Lack of Historical Data and Supporting
  Documentation
• Insufficient control on Debtors and Income
• Failed to adhere to the principles of Accrual
  Accounting
• Staffing Issues.

29
AUDIT COMMITTEE REPORT31 March 2006

• Audit Committee responsibility
• Meet 4 times a year (Committee met twice)
• The effectiveness of internal control - (Not
  effective)
• The quality of monthly and quarterly reports
  submitted in terms of the Act (Unable to
  review)
• Evaluation of annual financial statements
  (Concurs with AG report)

30
AUDITOR-GENERAL REPORT

•   

• QUALIFICATIONS Disclaimed Audit Opinion
• Property, plant and equipment.
• Revenue and trade and other receivables.
• Trade and other payables.
• Expenses.
• Contractual commitments.
• Inventories.
• Pay-as-you-earn (PAYE).
• Cash flow statement.
• Opening balances.

31
AUDITOR-GENERAL REPORT

•   

• EMPHASIS OF MATTER
• Weakness in internal controls
• Non-compliance with laws and regulations
• Audit Committee
• Previous audit report

32
ANNUAL FINANCIAL STATEMENTSStatement of
Financial Performance
33
ANNUAL FINANCIAL STATEMENTSStatement of
Financial Position
34

•   

ANNUAL FINANCIAL STATEMENTSNotes to the
Financial Statements
35

•   

ANNUAL FINANCIAL STATEMENTSNotes to the
Financial Statements
36

•   

ANNUAL FINANCIAL STATEMENTSNotes to the
Financial Statements
37
END