TO THE

1
PRESENTATION TO THE LABOUR
PORTFOLIO COMMITTEE
20 June 2007
2
SECTOR PROFILE ( Applicable Sic Codes)

• Generation of energy
• Generation of renewable energy
• Transmission of energy
• Distribution of purchased electric energy
• Manufacture of Gas, distribution of gaseous fuels
  through mains
• Project management, maintenance and operations of
  electrical generation, transmission and
  distribution plants, networks and systems
• Construction of pylons for electric transmission
  lines
• Electrical contracting
• Marketing of energy
• Industrial research for electrical energy

3
SECTOR PROFILE ( Applicable Sic Codes)

• Steam and hot Water Supply
• Collection, Purification and Distribution of
  Water
• Public Water Enterprises Collection
  Purification and Distribution of Water,
• including Portable Water Supply, domestic waste
  and sewage services, refuse and
• sanitation services
• Private water companies collection
  Purification and Distribution of Water,
• including Portable Water Supply, domestic waste
  and sewage services, refuse and sanitation
• services
• Irrigation boards Collection Purification and
  Distribution of Water,
• including Portable Water Supply, domestic waste
  and sewage services, refuse and sanitation
• services
• Water and Sanitation Services (portable water
  supply, domestic waste water and sewage systems)

4
SECTOR PROFILE

• 864 Employers
• 30 Large employers
• 60 Medium employers
• Balance represents SMMEs (774)
• 50 employers contributes 90 of income
• Eskom contributes gt70 of total levy

5
SETA Profile
ESETA AUTHORITY
ESETA Organogram 2006/7
EXCO
CEO
Executive Assistant
Chief Financial Officer
Sector Skills Plan Development Manager
Learnerships Manager
ETQA Manager
Human Resources Marketing (vacant)
Chamber Manager (vacant)
Finance Assistant
Learnership Officer
Sector Skills Officer
Accountant
ETQA Officer (Vacant)
Regional Admin Support x 3
Admin Support X 2
Admin Support x 3
Admin Support X 1
Admin Support X 1
Admin Support X 1

• Staff compliment 22 and 3 vacancies
• Explanation about the vacancies
• 2 of the 3 positions
  have been advertised
• - for the 1
  interviews have been conducted,
• - the other 1
  interviews are scheduled and
• - the last vacancy
  has recently become vacant)

General Worker
6
ANNUAL FINANCIALS AUDIT RESULTS
(R000s)

• SDL Income R92 208
• Total Investment Income R6 908
• Total revenue R100 600
• Total expenses R107 900
• Net deficit R7 300
• Total Cash Cash equivalents R97 530

7
ANNUAL FINANCIALS AUDIT RESULTS

• Qualification
• Mandatory grant accrual
• Due to inadequate monitoring, management did not
  implement adequate controls for the effective
  logging of the date of receipt of the WSPs and
  ATRs to ensure no payments were made to employers
  that did not submit their documents prior to the
  cut-off date of 30 September 2005. The mandatory
  grant accrual of
• R8.5 million was not supported by adequate
  documentation.
• Corrective Action
• The above finding has been addressed by the
  SETA. The WSP/ATRs received by 30 June 2006 have
  been logged correctly. A new MIS system has also
  been implemented where all the WSP/ATRs are being
  captured for 2006/7 financial year.

8
ANNUAL FINANCIALS AUDIT RESULTS

• Emphasis of matter
• Inadequate monitoring
• Due to inadequate monitoring and the lack of a
  dedicated compliance officer the following laws
  and regulations were not complied with
• Section 55(1) of the PFMA and Treasury Regulation
  28.1.6 - the financial statements submitted on 31
  May 2006 for audit purposes did not comply with
  Statements of GAAP and approved GRAP Standards.
• Corrective Action AFS were adjusted to comply
• Treasury Regulation 27.2 - no internal audit was
  functioning during the 2005-06 financial year.
• Corrective Action Internal Audit appointed and
  functioning.
• The Promotion of Access to Information Act, Act
  No. 2 of 2002 - the ESETA did not comply with
  sections 14, 15 and 32, which require a manual in
  three languages, written verification of the
  responsibilities of the information officer and
  the annual submission of amendments made to the
  manual to the Human Rights Commissioner.
• Corrective Action
• The manual has been translated to three languages
  and has been submitted to the Human Rights
  Commission. The responsibilities of the
  information officer are clearly stipulated on the
  manual and the CEO of ESETA serves as the
  Information Officer at the moment.

9
ANNUAL FINANCIALS AUDIT RESULTS
Emphasis of matter cont

• 2 Supply Chain Management
• Treasury Regulations 16A4(1) and 16A5(1) -
  existing staff and accounting authority members
  were not trained in supply chain management and
  no supply chain management unit was implemented
  under the chief financial officer.
• Corrective Action
• The Staff and Accounting Authority has been
  trained on Supply Chain Management Process in
  January 2007.
• The ESETA has appointed a Supply Chain
  Administrator under the office of the Chief
  Finance Officer.

10
ANNUAL FINANCIALS AUDIT RESULTS
Emphasis of matter cont

• 3 Performance Information
• In terms of Section 20(2)(c) of the PAA, the
  information relating to performance against
  predetermined objectives is subject to auditing
  by the Auditor-General. The performance
  information submitted could not be verified with
  sufficient supporting documentation.
• Corrective Action
• The ESETA has implementing an Management
  Information System to ensure that accurate
  information is captured and verified on a monthly
  basis. The challenge for the SETA ( due lo lack
  of human resources) is to capture the data as far
  back as the year 2000 to get accurate information
  on the ESETA performance.

11
ANNUAL FINANCIALS AUDIT RESULTS
Emphasis of matter cont

• Lack of policy frameworks
• The lack of policy frameworks resulted in the
  following
• The ESETA has no Human Resource and Succession
  plan in place.
• Corrective Action
• HR function has been under the office of the CEO
  and the administration of payroll under the CFO.
• Numerous attempts from the Office have
  been made towards employment of the HR
  Manager/Practitioner as HR issues seem to be
  rising up.
• The ESETA board recently asked the CEO to
  hold the process after the recruitment process
  went through, therefore the process is on hold. A
  new HR policy has also been developed by
  management and is being implemented.

12
ANNUAL FINANCIALS AUDIT RESULTS
Emphasis of matter cont
Lack of Policy Framework

• The succession plan policy has been developed
  and implemented within the organisation.
• The discretionary grant was disbursed without
  adequate controls to monitor the funds spent that
  support the National Skills Development Strategy
  targets.
• Corrective Action
• The Learnership manager has been appointed
  effective 01 February 2007. This has since
  ensured proper segregation of duties within the
  department and funds spent to support NSDS
  targets are being monitored.

13
KEY CHALLENGES

• Inadequate 10 Administration Funds to do all
  operational necessities (e.g. Marketing, regional
  presence, etc)
• Completeness of revenue
• Human resource constraints
• Provincial outreach constraints (related to
  bullet 1 above)
• Governance structures capacity constraints

14
ESETA INVESTMENTS AS AT 31 MARCH 2007

• NSF funding since inception
• - R13 m (Only Feb 2007)
• SETA Funds Invested with Private/Public
  Institutions 2006/7
• - N/A
• Cash at bank as at 31 March 2007
• - R97 m (RMB STD Bank)

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END