Download Marine and Coastal Management

DEPARTMENT OF ENVIRONMENTAL
AFFAIRS AND TOURISM
REPORT TO THE PORTFOLIO COMMITTEE
ON THE
MLRF ANNUAL REPORT FOR THE
2006/7 FINANCIAL YEAR
March 2008
CONTENTS
Overview……..
Introduction
• Vision and Mission
• Background to the MLRF
Performance Information:
• Vision and Mission
• Background to the MLRF
• Achievements
Audit Report
• Comparison with prior year
• Results of 2006/07 audit
• Way forward
OVERVIEW OF MLRF
DEAT’s AIM……
vision – “a prosperous and equitable society
living in harmony with our natural resources”.
OVERVIEW OF MLRF CONTINUED…
DEAT’s AIM……
mission – “leading sustainable development of
our environment for a better life for all” through:
• Promoting conservation and sustainable
utilization of our natural resources to enhance
economic growth.
• Promoting a global sustainable development
agenda.
• Transformation of the fisheries sector
MCM/MLRF Relationship to DEAT
Programmes of DEAT
The Branch: Marine and Coastal Management falls
under Programme 3 of DEAT
Programme 3: Marine and Coastal
Management
Promote the development and management of
South Africa's marine and coastal
environments in a way that ensures
sustainability of the marine resources while
maximising economic opportunities, job
creation and poverty alleviation.
MARINE LIVING RESOURCES FUND
Background to MLRF
• MLRF established in terms of Section 10 of the
MLRA, Act 18 of 1998
• MLRF is a schedule 3A Public Entity (PFMA)
• MLRF is the main source of funding for
operations of the Branch: Marine & Coastal
Management
MARINE LIVING RESOURCES FUND
CONTINUED
Background to MLRF
MLRF covers the operational costs of the 5 Chief
Directorates:
 R, A & I: Investigate and advise on sustainable use
of resources through carrying out research
 RM (Marine): Regulating utilisation through admin
of fishing rights, permits & licences
 MCS: Enforcing relevant laws and regulations
 ICM: Managing human impacts on the coast
through regulation
 CFO: Financial management of the MLRF
MARINE RESEARCH
Scientific Research
Achievements:
• Stock estimates and recommendations
completed for 18 fisheries
• Stock estimate reports for 2 new fishery
sectors (horse mackerel & octopus)
• Developed a graduate science programme
to ensure skills development
• Ecosystems effects of fishing & top
predators studies completed for BCLME
MARINE RESOURCE MANAGEMENT
Rights allocation & Regulation
Achievements:
• Long-term fishing rights granted in 20
fisheries
• Average interest by previously
disadvantaged rights holders = 59%
(December 2006)
• Draft policies on Subsistence & Small-scale
fisheries published
• Draft policy on the Management of Seals,
Seabirds & Shorebirds published
INTEGRATED COASTAL MANAGEMENT
Achievements:
Coastal conservation
• Published the Integrated Coastal Management
Bill for comment
• Gazetted Draft Marine Aquaculture policy for
public comment
• 3 Marine Protected Areas (MPAs) were declared
(Aliwal Shoal, De Hoop and Goukamma)
• Draft policies on BBWW & WSCD published for
public comment
• ToR for NPOA on land based sources of marine
pollution
Enforcement
MONITORING, CONTROL &
SURVEILANCE
Achievements:
• Improved monitoring capacity through the
implementation of the new Vessel
Monitoring System
• Effective deployment of EPVs
• Joint SADC patrol to Mozambique
• Co-operation agreements with lawenforcement agencies signed
Turnaround Financial Strategy
CHIEF FINANCIAL OFFICER
Achievements:
• Implemented an MLRF turnaround strategy for
weaknesses identified (AG and SCOPA)
• Implemented Oracle and MAST - Dec 06
– Financial Management System
– Management Information System
• Draft Cost Recovery Model developed
• Accounting policies and internal controls
changed to ensure compliance with
International Accounting Standards (IAS) and
PFMA
MARINE LIVING RESOURCES FUND
AUDIT REPORT
FROM DISCLAIMED AUDIT OPINIONS
(2003/04, 2004/05, 2005/06) TO A QUALIFIED
AUDIT OPINION IN 2006/07
Moving Towards an Unqualified Audit for
2007/08
MLRF AUDIT 2006/07 OVERVIEW
• Comparison of 2005/06 and 2006/07
financial year’s audit opinions
• Present management plan to move from
disclaimers and qualifications towards an
unqualified audit report in 2007/08
SUMMARY OF ANNUAL REPORT
This Annual Report represents a significant turnaround in
the management and systems governing the Fund:
• Previous audit report had 20 qualifications - AG decided
not to express an opinion
• Current audit report has 5 qualifications - AG decided to
express an opinion
– still a concern to the Department
• Improvement in financial management has led to the
clearing of significant disclaimers relating to revenue,
debtors and disposal of assets
SUMMARY OF ANNUAL REPORT
CONTINUED…
• Correct application of IAS
• Continued improvement of governance
issues, with a focus on due diligence,
strengthening the control environment and
improving coordination, communication
and monitoring
• Special attention given to strengthening
the financial accounting skills and capacity
of the entity
COMPARISONS BETWEEN 2005/06 AND
2006/07 FINANCIAL YEARS
Audit
Qualification
Property, plant
and equipment
Revenue,
trade and
other
receivables
Expenses,
Trade and
other payables
Year 05/06










None compliance with
GAAP
Depreciation overstated
(2Q)
Debtors could not be
verified
Validity of Revenue could
not be confirmed
(9Q)
Incorrect allocation of
vessel operating cost
Incorrect allocation of
commission paid
Supplier statements not
provided/reconciled
(4Q)
Amount
Year 06/07
Amount
R 1M
Overstatement
(Florence Mkize)
(1Q)
R0.7M
R 33M
None
-
R 75M
None
-
R 28.6M
None
-
R 6.4M
None
-
R17m
Supplier
reconciliations
overstated (1Q)
R1m
COMPARISONS BETWEEN 2005/06 AND
2006/07 FINANCIAL YEARS continued….
Audit
Qualification
Contractual
commitments
Inventories



Pay as you earn


Cashflow
statements
Year 05/06



Could not be verified
(1Q)
Was disclosed as R0
instead of its fair
value
(1Q)
No employee’s tax
deducted. No
exemption cert for
labour brokers
(1Q)
Was not prepared in
terms of GRAP 2
(1Q)
Amount
Year 06/07
Amount
R 86M
None
-
-
None
-
Could not
be
determined
None
-
-
None
-
COMPARISONS BETWEEN 2005/06 AND
2006/07 FINANCIAL YEARS continued….
Audit
Qualification
Opening
balances
Government
grants
TOTAL
Year 05/06



Accuracy and
completeness of
opening balances were
in question
(1Q)
None
20 Qualifications
(Disclaimed opinion)
Amount
Year 06/07
Amount
-
Accuracy and
completeness of
opening balances
were in question
(1Q)
Deferred income
completeness not
verified due to
opening balance
qualification &
deficiency of prior
years’ internal
controls (2Q)
5 Qualifications
(Qualified opinion)
-
-
R247m
R24m
(No
approval)
R25.7m
TOWARDS AN UNQUALIFIED AUDIT
REPORT
• Management formed a Project Steering
Committee called “Let’s Fix It” - meets
weekly, internal audit participates
• Temporary staff appointed to assist in
problematic areas i.e. creditors recons,
balance sheet accounts recons, deferred
income recons and fixed assets
• CFO appointed
PROGRESS TO DATE
• Asset verification process commenced and
procedures for disposal of assets functional
• Procedure manual on payables developed
• Ongoing work on Supplier recons, payment on
statement only
• Budget process for the 2008/09 financial year
was finalised
• Ongoing training on Oracle financial system
• Financial management training schedule with
SAMDI finalised
LETS FIX IT!