SECTION 4: - National Prosecuting Authority

SECTION 4:NPA ANNUALFINANCIALSTATEMENTS51

PageSECTION 4: ACCOUNTING REPORT OF THE NPAReport of the Accounting Officer 53Report of the Audit Committee 61Report of the Auditor-General 63Appropriation Statement 70Notes to the Appropriation Statement 74Statement of Financial Performance 75Statement of Financial Position 76Statement of Changes in Net Assets 77Cash Flow Statement 78Accounting Policies 79Notes to the Annual Financial Statements 85Disclosure Notes to the Annual Financial Statements 97Annexures 10552

Report by the AccountingOfficer to the ExecutiveAuthority and Parliamentof the Republic of SouthAfrica1. General review of the state offinancial affairsThe structure of the National ProsecutingAuthority (NPA) consists of the following businessunits:• National Prosecutions Service (NPS)• Directorate of Special Operations (DSO)• Asset Forfeiture Unit (AFU)• Special National Services Division (SNSD) :consisting of the Sexual Offences and CommunityAffairs Unit (SOCA), Specialised CommercialCrimes Unit (SCCU), Witness Protection Unit(WPU) and the Priority Crimes Litigation Unit(PCLU) 1• Corporate Services (CS)As previously reported, the CEO continued tooperate as the Accounting Officer of the NPA on thebasis of a delegation of authority from the DirectorGeneral (DG) of the Department of Justice andConstitutional Development (DoJ&CD). The CEOof the NPA is also the Accounting Officer of theDSO as stated in the NPA Act.Table 9: Financial Position of the NPA as at 31 March 2008.These financial statements are the eighth setof financial statements produced by the NPA,separately from the DoJ&CD and, whilst they areseparately audited by the Auditor-General, this willbe consolidated with the financial statements of theDoJ&CD. This is the arrangement with the DoJ&CDand National Treasury.Highlights of the financialpositionThe audit qualifications emanating from theprevious financial year were addressed through thedevelopment of an action plan and implementationof the monitoring tool of the National Treasury.Responsibility for actions was assigned and progressreported on to the Audit Committee and NationalTreasury on a quarterly basis. The monitoring isspecifically aimed at improving internal controlsand ensuring adherence to policies and procedures.Training and information sessions were conducted tostrengthen capability and address the inefficienciesidentified.The NPA made an application to the NationalTreasury for condonation of irregular expenditure tothe amount of R189m. The final approval is awaited.Steps to address and prevent the re-occurrenceof irregular expenditure have been taken and theIrregular Expenditure Committee reinstated. TheCEO receives regular reports on the activities ofthe committee.2007/08 2006/07R’000 R’000Adjusted appropriation 1,804,691 1,582,062Virement from DoJ & CD 56,575 3,023Final Appropriation 1,861,266 1,585,085Less: Total expenditure 1,860,269 1,535,754Variance 997* 49,331* The saving of R 997 is attributed to the vacancies in the NPA.It is important to note that in respect tobudgetary matters, the NPA does not administerthe full budget for lower court prosecutors. Itstill only administers the personnel budget. Theadministration of the remainder of this budgetremains with the DoJ&CD. This is an issue thatneeds to be resolved along with accountability andreporting between the NPA and the departmentto enable the NPA to better serve the needs of itsemployees.1The PCLU was incorporated as a component within the National Prosecutions Service during the financial year under review.53

Funds were viremented from the DoJ&CD vote 22,Programme 2 to Programme 4 in the NPA. Thefunds were allocated to goods and services. Thevirement was approved by the Accounting Officerof the DoJ&CD.Information Technology and Motor VehicleLeasing ArrangementsThe NPA requested condonation from NationalTreasury for the abovementioned transactions.Research at the time suggested that it would bean extremely cost-effective model which has nowbeen proven to be correct. A number of otherdepartments including STATS SA have now goneout on tender, based on the same model. Futuretransactions of this nature have now been facilitatedby the National Treasury Practice Note 5 of 2006.Funds not received via the budget processThe Integrated Justice System (IJS) is allocatedfunding for integrating Information ManagementSystems through information technology in thecluster. Through the normal procurement process,expenditures by departments in this respect aresubmitted to the IJS Committee for approval andthen claimed back from the DoJ&CD.The NPA received an amount of R23 113 226from the DoJ&CD. After indicating additionalneeds, the total amount allocated was R34 628 639.This money was predominantly used on systemsdevelopment, and a third was used for capitalexpenditure. The assets purchased were recordedin the departmental assets register.The Criminal Assets Recovery Account (CARA)A separate set of financial statements will bepublished for CARA as agreed with the Office ofthe Accountant General.2. Services rendered by the NPAThe NPA’s vision is “Justice in our society so thatpeople can live in freedom and security”.The mission statement of the NPA is:“Guided by the Constitution, we in the NationalProsecuting Authority ensure justice for the victimsof crime by prosecuting without fear, favour orprejudice and by working with our partners and thepublic to solve and prevent crime”.The services rendered by the NPA are describedbroadly below:• Public Prosecutions co-ordinates and assistsprosecutions in both the high and lower courts.• The Witness Protection programme co-ordinatesthe safekeeping and protection of witnesses incertain cases.• Directorate of Special Operations (also knownas the Scorpions) investigates and prosecutesserious organised crime.• Asset Forfeiture Unit removes the profits ofcrime.• Corporate Services renders the followingservices to the operational units:-• Finance and Procurement ManagementServices.• Human Resource Management andDevelopment Services.• Information Management Services.• Research and Policy Management Services.• Security Services.• Communication Services.• Strategy and Risk Management Services, and• Integrity Management Services.2.1 InventoriesA stock take was conducted on the 31st of March 2008,and the value thereof was established at R190 666.84.The basis of the valuation was invoice cost.2.2 Tariff policyThe NPA does not charge tariffs in regards toservices rendered.54

3. Capacity constraintsa) Directorate of Special Operations (DSO)The major constraints faced by the DSO relatedto the relative difficulty in recruiting appropriatelyskilled staff, and the inability to offer market relatedsalaries for specific professional classes.This once again resulted in an insufficient numberof operational staff to conduct their core function.The DSO proceeded to establish a separateadministration as decided in the previous financialyear.A number of administrative posts for the DSOwere filled which are aimed at providing leadershipin establishing proper reporting and systemsprocedures for the DSO.b) Sexual Offences and Community Affairs(SOCA)Once again the major constraint experienced by thisunit was the continued reliance on donor fundingfor critical projects such as the Thuthuzela CareCentres.c) Asset Forfeiture UnitA major constraint experienced by the unit was thelack of experienced and skilled human resourcecapacity to deal with complex cases in addition to aninadequate budget for legal and other professionalservices. The unit struggled to attract suitablecandidates, specifically previously disadvantagedcandidates as it was unable to offer market relatedsalaries. The unit recruited talented interns thatare being groomed and in so doing is creating apool of previously disadvantaged lawyers fromwhich to recruit. The unit increased its approvedestablishment to 141 and increased the numberof staff from 85 to 106. Of the 36 posts that werefilled, 24 were external appointments.Additional funds of about R6m were receivedfrom CARA which funded some of its training andprofessional services requirements.d) Witness Protection Unit (WPU)The WPU appointed 105 additional employeeswhich consisted mainly of protectors. Theallowance paid to witnesses is inadequate and isone of the main reasons why people abandon theprogramme. The allowance is being reviewed andthe necessary submissions will be made. The unitunder spent its budget by 7% on goods and servicesmainly due to a review of the actual expenditure,and cost reduction initiatives.e) Corporate Services (CS)The CS unit continued to battle to keep pace withthe growing size and complexity of operationalunits.The NPA received substantial additional fundingfor prosecutors and other core staff and thereforeCS prioritised the filling of posts for operationalunits, from the CS budget. This, in addition to thehigh turnover of staff including key managers in CS,meant that CS failed to grow at the required levelto ensure minimum standard service delivery tooperational units.The NPA embarked on a recruitment drive andprioritised the filling of vacancies. It is also becomingabundantly clear that the NPA’s non-personnelbudget requires additional funding for centraliseditems such as fleet services, accommodation,information technology, training and developmentand security services. A substantial growth in thesebudget items is required over the next few years toensure that CS is able to provide operational unitswith the necessary support.Accommodation mainly for prosecutors at thelower courts has proven to be hugely problematic.A number of hot spots were identified such asPietermaritzburg, Evander, Odi, Thohoyandou,Aliwal North and Cradock. The conditions areappalling and contravene the provisions of theOccupational Health and Safety Act which couldcompromise the Accounting Officer.The NPA engaged the DoJ&CD to addressaccommodation concerns’ regarding prosecutorsand a service provider was appointed to evaluatethe situation, and make recommendations.The NPA’s inability to appropriately budget foraccommodation is also linked to the GovernmentImmovable Asset Management Act, no 19 of 1997,which places the control with the Department ofPublic Works removing control, from the NPA,over its delivery. Accommodation was escalated toa strategic project in the NPA.f) GeneralThe general capacity constraints described abovefall within three major areas:-• A general inability to attract and retain staffand managers with the necessary skills andexperience, specifically African females.55

• The lack of capacity in the organisation iscompounded by the inability to speed uprecruitment efforts.• A budget with high personnel expenditurewhich is not supported by the required goodsand services, and capital budget.4. Utilisation of donor fundsBelow is an exposition of projects funded throughdonations during the current financial year:5. Corporate governancearrangementsThe Employee Wellness Programme of the NPAprovided telephonic counselling to 255 employees,and 333 employees received face to face counselling.Various pro-active stress management programmeswere rolled out, aimed at equipping employees withthe knowledge and skills to deal with stress relatedconcerns. 348 employees were reached throughthis programme.Table 10: Projects funded through donations during the current financial yearDonor Project Short descriptionUSAIDW K KellogFoundationSpecialist Prosecutors To empower prosecutors and other role players with specialised knowledge andskills to better handle cases of sexual and domestic violence throughmultidisciplinary training, community outreach and research programmes.Thuthuzela Project To manage Thuthuzela Care Centres (TCCs) for victims of child abuse and rape,training and development and public education.UNICEF Sexual offences To manage TCCs for victims of child abuse and rape, training and development andpublic education.Vodacom Thuthuzela Project To establish, renovate and launch sexual offences courts.Business AgainstCrime (BAC)RJ HillhouseTo collaborate and coordinate the preparation for prosecutions.Greece Thuthuzela Project To manage TCCs for victims of child abuse and rape, training and development andpublic education.Royal Danish CommissionNdabezitha ProjectTo resolve domestic violence in rural communities.WoolworthsFoundation forHuman RightsSexual OffencesCourtsMissing Persons TaskTeamTo develop a child friendly environment.Implementation of the recommendation of the Truth and Reconciliation Commission(TRC) regarding missing persons.European Union Human trafficking Assistance to SA Government to prevent and react to human trafficking.Please refer to Annexure 1D of the Annual Financial Statements for further details in regard to donor funding.HIV and Aids awareness workshops were hostedand 313 employees were reached. Two voluntaryHIV and AIDS counselling and testing sessions wereheld and 46 employees were tested this includedsome of the top leadership of the NPA. The NPAcommemorated national HIV and Aids campaignsand reached 620 employees throughout theorganisation.The NPA approved various policies aimed atpreventing corruption, theft and fraud.Governance and Enterprise Risk ManagementThe NPA made strides in the area of governanceand enterprise risk management in the year underreview. It continues to be guided by the governancemodel developed as part of the NPA Strategy 2020.56

The necessary progress in establishing a GovernanceCentre in the year under review was, however notmade, due to internal debates about the macrostructureof the NPA currently being reviewed.This in turn impacted on the capacity of theOffice of the CEO to implement new governanceprocesses. Despite this, progress was made in thedevelopment of a governance calendar which isexpected to become fully functional in 2008/09.The NPA made progress in the area of enterpriserisk management in the year under review. Riskassessment workshops were conducted for allbusiness units and service centres. Risk owners wereassigned for all risks, with there being reasonableprogress in the development of risk mitigationplans. Quarterly reporting by business units andservice centres on performance includes reportingon management of these risks. The NPA also madeprogress in the development of its Enterprise RiskManagement System, this will be finalised in thenext financial year.From an oversight perspective, the NPA reportson the progress of risk management within theorganisation to the Joint Audit Committee, atminimum, on a quarterly basis.Integrity Management Unit (IMU)The Integrity Management Unit continued its workin two critical areas, namely, integrity promotionand combating of integrity breaches. The unitcompleted a number of highly sensitive internalinvestigations in the organisation in the past year.At the same time, and perhaps more importantly,it has made strides in its efforts to prevent integritybreaches.The unit continued to profile the SMS leadershipin the organisation to bolster the work of vettingof personnel, to ensure that the NPA is able tointervene timeously should any “red flags” orwarning signs be picked up in the profiling process.The initial vetting process does not necessarilyidentify integrity risks in new personnel recruitedand often it is only after the individual has been inthe employ of the organisation for a period of timethat integrity is challenged. It is thus important thatthe NPA, assisted by the IMU, can track the profilesof its management cadres.The unit is developing an early warning systemthat will allow it to detect unethical conduct andprovide management information. The values ofthe NPA have been agreed on and will be launchedas part of the NPA’s 10 year celebrations in 2008/09.The NPA’s Code of Conduct is being reviewed toensure its alignment with the values and to makesure that it caters for all NPA employees. Anintegrated Integrity Steering Committee has beenestablished to support business units in ensuringhigh levels of integrity in the NPA.Security and Risk Management Unit (S&RM)The S&RM unit plays a critical role in the NPA’soverall risk management efforts. Its two criticalareas of work in this regard are the vetting ofpersonnel, and providing threatened employeeswith protection as and when required, and in linewith the NPA’s Protection Plan.Whilst the National Intelligence Agency (NIA)is responsible for issuing of security clearancecertificates, this unit plays an important role ingathering all relevant information to speed up theprocess at NIA. There is a 70% level of compliancewith vetting in the NPA. This is not high enough foran organisation like the NPA and is a slight declineon the 74% compliance measured last year.The service centre experienced severe capacityconstraints and was without an executive managerfor almost a year. The NPA depends on NIA forvetting and the prioritisation of NPA applications forvetting is critical to the NPA.S&RM continued to provide threatened employeeswith protection in terms of the NPA’s EmployeeProtection Policy. This continues to be a key part ofthe NPA’s risk management strategy given the numberof high profile cases currently under investigation.This unit also now has the responsibility ofoccupational health and safety issues.Internal Audit and Audit CommitteeThe Internal Audit Unit continuously reviews theoperations of the NPA under the direction of theChief Audit Executive (CAE) based at the DoJ &CD.The Audit Committee, which operates in termsof its own charter, continued to hold quarterlymeetings with the Internal Audit Unit, ExecutiveManagement and the External Auditors. Individualmembers of the Audit Committee are required todeclare any interest at each meeting in order toavoid conflict of interest and to date no conflict ofinterest has been declared. The Audit Committeewelcomed an additional Audit Committee memberduring the year under review.57

The Internal Audit Unit’s primary responsibilityis to provide assurance on risk management, controland governance processes. This unit continued toreport significant findings emanating from the auditprocess to management and the Audit Committee.Management in turn addressed the issues raised bythe Internal Audit Unit in order to enhance the riskmanagement and governance processes within theNPA.The Internal Audit Unit of the NPA wasintegrated into the Internal Audit Unit of theDoJ&CD. Progress was made in optimising auditoperations in the NPA. Internal Audit plans areapproved annually by the Audit Committee.Budget ControlThe NPA Exco set up a Budget Sub-Committeewhich held quarterly Budget Review meetings withthe heads of all business units.During these reviews the heads of the businessunits presented their budget performance andprovided reasons for either over or under spendingof the funds allocated. These reviews allow thebusiness units the opportunity to explain to theBudget Committee why funds projected for certainmajor projects have not been spent. Managementthen reprioritises available funding to other projectsduring the financial year.6. Discontinued activities/activitiesto be discontinuedThe positioning of the DSO within the NPA is underreview, and there is a high probability that it will bere-located outside the NPA in the near future. TheDSO is responsible for investigating and prosecutingcomplex, organised crime. The prosecutorscurrently attached to the unit will in all probabilitynot be re-located with the investigative and analysiscomponents. The budget allocated to the DSO willbe re-allocated in line with the re-location.7. Asset ManagementAsset management was given top priority duringthis financial year because of the audit qualification.A lack of resources in the Finance and Procurementservice centre necessitated the NPA to outsourcethe asset verification process and establishment ofan accurate asset register. The NPA purchased astand alone software package that will enhance theNPA’s ability to manage its assets. The verificationprocess has three phases: physical asset verificationof all assets; capturing of five financial years worthof invoicing in a spreadsheet, and then reconcilingthe physical and invoiced assets to develop a reliableand correct asset register.8. Performance informationPerformance management was successfullyinstitutionalised with quarterly reviews by theEnterprise Performance Management Exco subcommittee.Business units report on performanceagainst planned activities, and constraints andbottlenecks are addressed in an integrated manneracross business units. An electronic reporting systemwas successfully implemented and is operational.The internal research component of the NPAwas requested to determine the existence ofverifiable evidence to determine the veracity of theprogress reports, outputs and performance dataagainst the annual business plans. Best practiceswere identified and governors provided with ameasure of assurance in this regard.58

9. SCOPAThe NPA received three SCOPA resolutions that were responded to, see table 11 for details:Table 11: SCOPA resolutions that were responded toReference toSCOPA resolutionsSection 6: PerformanceAudit: Sixthreport to the standingcommittee paragraph3 (3)(1)SubjectAccountability andgovernance status ofthe NPAFindings on progressThe NPA has not been listed as an entity in terms of the PFMA. The matter wastaken up with the Ministry. At this stage the Minister of Justice and ConstitutionalDevelopment is of the opinion that the matter should be raised with the Cabinet.The mechanism for funding of the NPA has not been finalised.Section 6: PerformanceAudit: Sixthreport to the standingcommittee paragraph3 (3)(2)Capacity and peoplerelated issuesThe NPA embarked on an extensive effort to fill vacancies on the establishment.The NPA filled 1 332 posts in this financial year. The details of the establishment willbe contained in the HR Oversight Report in the Annual Report of the NPA.Section 6: PerformanceAudit: Sixth report tothe standing committeeparagraph 4Criminal assetsrecovery accountThe AFU Case Register records progress on the disposal of cases. The NPA is inthe process of verifying the data in the individual case files for transfer to the assetregisters. A register of all confiscation orders was created for CARU. The Pastelaccounting programme will be used in 2008/09 to create a ledger of all monies dueto CARA.The Electronic Case Management System (ECMS) will replace the manual systemcurrently being used. The enforcement section in the AFU is utilised to follow upwith tardy curators.The operational guidelines were revised and processes mapped. A monthly reconciliationis done on the AFU Case Register of all CARA deposits. The EnforcementSection in the AFU implemented a checklist to follow up on outstanding depositsand documentation from finalised cases.Draft Policies will be finalised and presented to the Committee and include the BidPolicy, CARA Operational Policy, Assets Disposal Policy and the Grant ManagementPolicy.Three critical vacant positions have been filled and five interns appointed to addressthe backlog and case file update process.59

60ApprovalThe Annual Financial Statements set out on pages70 to 112 have been approved by the AccountingOfficer.

Report of the AuditCommitteeWe are pleased to present our report for thefinancial year ended 31 March 2008.Audit Committee members andattendanceThe Audit Committee is the same as that ofthe Department of Justice and ConstitutionalDevelopment and consists of the memberslisted below. It is required to meet four timesa year as per its approved terms of reference.During the current year six meetings wereheld, some concurrently with the meetings ofthe Department of Justice and ConstitutionalDevelopment.Table 12: Audit Committee members and meetings attendanceName of MemberNumber of Meetings attendedStewart Patterson (Chairperson) 6Ms. Catharina Sevillano-Barredo (appointed 29 May 2007) 6Cedric Boltman 5Ms. Ntombi Langa-Royds 4Motsamai Karedi 4Audit Committee responsibilityThe Audit Committee reports that it has compliedwith its responsibilities arising from Section 38 (1)(a) of the PFMA and Treasury Regulation 3.1. TheAudit Committee also reports that it has adoptedappropriate formal terms of reference as its AuditCommittee charter, has regulated its affairs incompliance with this charter and has discharged allits responsibilities as contained therein.The effectiveness of internalcontrolThe Chief Audit Executive of the Department ofJustice and Constitutional Development assumedcontrol of the internal audit function of the NPA atthe request of the Accounting Officer in 2006 andthe decision was subsequently taken to integratethe internal audit staff of the NPA and the DOJ &CD into one unit. Difficulties were experiencedwith the integration process and this combinedwith staff shortages resulted in certain internalaudit functions planned for the year not beingaddressed.The system of internal control was notentirely effective during the year under review,as compliance with prescribed policies andprocedures were lacking in certain instances.During the year under review, several instances ofnon-compliance that resulted from a breakdownin the functioning of controls were reported byinternal and external auditors.Significant control weaknesses have beenreported by the Auditor-General underqualification, emphasis of matter and in themanagement letter. In certain instances theweaknesses reported previously have not been fullyand satisfactorily addressed. The effect of theseinstances has been included in the annual financialstatements and the report of the AccountingOfficer.The quality of in year managementand monthly/quarterlyreports submitted in terms of thePFMA and the Division ofRevenue ActThe Audit Committee is satisfied with the contentand quality of monthly and quarterly reportsprepared and issued by the Accounting Officer of theNPA Department during the year under review.Evaluation of FinancialStatementsThe Audit Committee has:• Reviewed and discussed with the Auditor-General and the Accounting Officer, the auditedannual financial statements to be included in theannual report;61

• Reviewed the Auditor-General’s managementletter and management’s response thereto;• Reviewed significant adjustments resulting fromthe audit.The Audit Committee concurs and accepts theconclusions of the Auditor-General on the annualfinancial statements and is of the opinion that theaudited annual financial statements be acceptedand read together with the report of the Auditor-General.Chairperson of the Audit Committee7 August 200862

REPORT OF THEAUDITOR-GENERALTO PARLIAMENT ON THEFINANCIAL STATEMENTS ANDPERFORMANCE INFORMATIONOF THE NATIONAL PROSECUT-ING AUTHORITY FOR THE YEARENDED 31 MARCH 2008REPORT ON THEFINANCIAL STATEMENTSIntroduction1. I was engaged to audit the accompanyingfinancial statements of the National ProsecutingAuthority (NPA) which comprise theappropriation statement, statement of financialposition as at 31 March 2008, statement offinancial performance, statement of changesin net assets and cash flow statement for theyear then ended, and a summary of significantaccounting policies and other explanatory notes,as set out on pages 70 to 112.Responsibility of the accountingofficer for the financial statements2. The accounting officer is responsible for thepreparation and fair presentation of thesefinancial statements in accordance with themodified cash basis of accounting determinedby the National Treasury, as set out inaccounting policy note 1 and in the mannerrequired by the Public Finance ManagementAct, 1999 (Act No. 1 of 1999) (PFMA) and theNational Prosecuting Authority Act, 1998 (ActNo. 32 of 1998). This responsibility includes:• designing, implementing and maintaininginternal control relevant to the preparationand fair presentation of financial statementsthat are free from material misstatement,whether due to fraud or error• selecting and applying appropriateaccounting policies• making accounting estimates that arereasonable in the circumstances.Responsibility of the Auditor-General3. As required by section 188 of the Constitutionof the Republic of South Africa, 1996 readwith section 4 of the Public Audit Act, 2004(Act No. 25 of 2004) (PAA) and section 36(4)of the National Prosecuting Authority Act,1998 (Act No. 32 of 1998), my responsibilityis to express an opinion on these financialstatements based on conducting the audit inaccordance with the International Standardson Auditing and General Notice 616 of2008, issued in Government GazetteNo. 31057 of 15 May 2008. Because of thematters discussed in the Basis for disclaimer ofopinion paragraphs, however, I was not ableto obtain sufficient appropriate audit evidenceto provide a basis for an audit opinion.Basis of accounting4. The NPA’s policy is to prepare financialstatements on the modified cash basis ofaccounting determined by the NationalTreasury, as set out in accounting policy note 1.Basis for disclaimer of opinionIrregular, fruitless and wasteful expenditure5. The current supply chain environment withinthe NPA is not conducive for maintaining anappropriate procurement and provisioningsystem which is fair, equitable, transparent,competitive and cost-effective, as requiredby section 38(1)(a)(iii) of the PFMA. This hasresulted in the disclosure of the cumulativeamount of R423 million worth of irregularexpenditure awaiting condonement asdisclosed in note 24 to the financial statements.Audit evidence obtained indicates that thisfigure is understated by a potential R86 million.The NPA also failed to disclose fruitless andwasteful expenditure of R1 million identifiedduring the audit process.Furthermore, due to possible fraudulentactivities having been identified, a full scaleinvestigation into procurement at the NPA63

has been launched. The outcome of theinvestigation cannot presently be determinedand it is therefore uncertain whether and towhat extent the irregular expenditure figurementioned above will be affected when thisinvestigation is concluded.Tangible assets6. The following misstatements were identifiedresulting mainly from ineffective asset management:• the closing balance for tangible capitalassets of R165 million as disclosed in note 27to the financial statements could not besupported by an asset register;• minor assets disclosed in note 27 to thefinancial statements are understated by anestimated amount of R11 million; and• finance lease assets representing a materialamount in relation to total assets werenot disclosed in note 27 to the financialstatements.As a result of these matters, I was unable tosatisfy myself as to the existence, completeness,valuation and rights and obligations of theclosing balance of the assets as disclosed innote 27 to the financial statements.Leave entitlement7. The entity does not have adequate policies andprocedures in place to address the capturingand submission of leave forms, as required bysection 38(1)(a)(i) of the PFMA resulting in thefollowing control weaknesses:• a backlog in the capturing of manual leaveforms has resulted in the leave records onthe PERSAL system being incomplete; and• a large number of leave transactionscaptured on the E-leave system did notappear on the PERSAL system.As a result of these matters, I was unableto satisfy myself as to the completeness andvaluation/accuracy of the leave provision andleave gratuities disclosed in notes 22 and 7 tothe financial statements respectively.Intangible assets8. A comprehensive software and intangible assetpolicy addressing the budgeting, planning,development, testing, ownership (and safeguarding)and roll-out phases of softwaredevelopment as well as the related costing andcost allocation of the software development,has not been drafted and approved by theNPA, as required by section 38(1)(a)(i) of thePFMA, resulting in the following deficiencies:• the closing balance of R40 million asdisclosed in note 28 of the financialstatements could not be supported with anasset register;• the statement of financial performanceincludes intangible asset purchasesamounting to R2 million that wereerroneously classified and treated ascurrent expenditure; andAs a result of these matters, I was unable tosatisfy myself as to the existence, completenessand valuation of the intangible capital assets asstated in note 28 to the financial statements.Prepayments and advances9. Prepayments and advances of R22 million,disclosed in the statement of financial position,originated from the sale and leasebacktransaction in the 2005/06 financial year. Theamount in question is not recoverable fromthe lessor and the balance disclosed on thestatement of financial position is thereforeoverstated by R22 million. As a result of theabove transaction, departmental revenueof R22 million as disclosed in note 14 to thefinancial statements has to date not beensurrendered to the National Revenue Fund asrequired by section 11(1)(a) of the PFMA.Financial management10.The present systems and procedures toeffectively manage expenditure in terms ofthe budget have serious limitations, whichhas resulted in funds being spent very latein the financial year. R100 million was spentin March 2008 compared to R56 millionin November 2007 which was the highestamount spent during any other month duringthe year under review. The reprioritisationof expenditure by the Department ofJustice and Constitutional Development wasapproved late in March 2008, resulting inNPA reporting a bank overdraft of R29 millionas the reprioritised funds were not available atyear end.64

Lease commitments11. The following misstatements were identified:• Cell phone lease commitments amounting toR6,5 million have been incorrectly classifiedas a commitment in the financial statementsinstead of a finance lease commitment. Thefinance lease commitments as disclosedin note 23 to the financial statements aretherefore understated by R6,5 million andcommitments overstated by the sameamount; and• Finance lease commitments as disclosedin note 23 to the financial statementsis understated by a further R6,4 milliondue to the incorrect calculation of thesecommitments.Housing guarantees12. The NPA does not have any system ofcontrol in place to ensure the accuracy andcompleteness of housing guarantees recordedon the PERSAL system. Discrepanciesidentified included, amongst others, activehousing guarantees on the system for officialswho resigned and who were transferred toother national departments. In addition to theabove, the cumulative amount of guaranteesper the PERSAL system did not agree to theclosing balance for housing guarantees of R4,7million disclosed in note 19 to the financialstatements.As a result of these matters, I was unable tosatisfy myself as to the existence, completeness,valuation and rights and obligations pertainingto housing guarantees disclosed in the financialstatements.Disclaimer of opinion13. Because of the significance of the mattersdescribed in the Basis for disclaimer ofopinion paragraphs, I have not been able toobtain sufficient appropriate audit evidenceto provide a basis for an audit opinion on thefinancial statements of the NPA. Accordingly,I do not express an opinion on the financialstatements.Emphasis of matterI draw attention to the following matter:Significant uncertainty14. Interim approval has been granted by theAccountant-General for the NPA to prepareits own set of financial statements from the2002 financial year. Since then no finality hasbeen reached on the following critical matters,affecting the accountability and governancestatus of the NPA:• clear definition of the duties of theaccounting officer of the NPA;• the listing of the NPA as an entity in termsof the PFMA; and• the mechanism of funding for the NPA.In its “Announcements, tablings and committeereports” dated Friday 8 February 2008 SCOPAhas recommended that the matters mentionedabove be finalised as a matter of urgency toensure that the NPA realises its mandate. Todate the status quo remains.OTHER MATTERSI draw attention to the following matters thatrelate to my responsibilities in the audit of thefinancial statements:Internal controls15.Section 38(1)(a)(i) of the PFMA states thatthe accounting officer must ensure that thedepartment has and maintains effective,efficient and transparent systems of financialand risk management and internal control.The table below depicts the root causes thatgave rise to the inefficiencies in the system ofinternal control, which led to the disclaimerof opinion. The root causes are categorisedaccording to the five components of aneffective system of internal control. In someinstances deficiencies exist in more than oneinternal control component.65

Table 13: Root causesReporting itemIrregular and fruitless and wasteful expenditureControlenvironmentxRiskassessmentControlactivitiesInformationandcommunicationMonitoringTangible assetsxLeave entitlementxIntangible assetsxPrepayments and advancesxFinancial managementxLease commitmentsxHousing guarantees x xControl environment: establishes the foundation for the internal control system by providing fundamental discipline and structure for financialreporting.Risk assessment: involves the identification and analysis by management of relevant financial reporting risks to achieve predetermined financialreporting objectives.Control activities: policies, procedures and practices that ensure that management’s financial reporting objectives are achieved and financial reportingrisk mitigation strategies are carried out.Information and communication: supports all other control components by communicating control responsibilities for financial reporting to employeesand by providing financial reporting information in a form and time frame that allows people to carry out their financial reporting duties.Monitoring: covers external oversight of internal controls over financial reporting by management or other parties outside the process; or theapplication of independent methodologies, like customised procedures or standard checklists, by employees within a process.Non-compliance with applicable legislation16. Treasury Regulations (TR) were not compliedwith in the following respects:• expenditure was approved by the delegatedor authorised official without taking intoaccount any limitations or conditions attachedto the delegation or authorisation as requiredin terms of TR 8.2.2; and• payments to service providers were not in allinstances made within 30 days as is requiredin terms of TR 8.2.3.17. The Preferential Procurement Policy FrameworkAct, 2000 (Act No. 5 of 2000) and Supply ChainManagement Practice Notes issued in terms ofsection 76(4)(c) of the PFMA were not compliedwith in the following respects:• tenders were not in all instances awarded tothe supplier with the highest points;• tender process was not in all instancesfollowed for payments exceeding R200 000(prior to 1 December 2007) and R500 000(from 1 December 2007 onwards);• goods were not procured from an approveddatabase of suppliers; and• goods and services above the value of R1million (VAT included) and procured in termsof Treasury Regulation 16A6.4 were not in allinstances reported to the National Treasuryand the Auditor-General.18. Appointments were not in all instances approvedby the delegated or authorised official as requiredin terms of chapter 3 of the National ProsecutingAuthority Act, 1998 (Act No. 32 of 1998).19. The National Strategic Intelligence Act, 1994(Act No. 39 of 1994) was not complied with inthe following respect:• The National Intelligence Agency (NIA), interms of section 2(b) of the above mentionedact, on 9 April 2003 had approved for the useof a service provider to perform technicalsurveillance counter measures (TSCM)services at the NPA for a period of 18 months.This service was subsequently subcontractedto another service provider who was notvetted or approved by the NIA; and• NPA continued to utilise the subcontractor toperform TSCM services after the approvedperiod by NIA.66

Matters of governance20. The PFMA tasks the accounting officer with a number of responsibilities concerning financial and riskmanagement and internal control. Fundamental to achieving this is the implementation of certain keygovernance responsibilities, which I have assessed as follows:Table 14: Matters of governanceMatters of governance Yes NoAudit committeeThe department had an audit committee in operation throughout the financial year.The audit committee operates in accordance with approved, written terms of reference.The audit committee substantially fulfilled its responsibilities for the year, as set outin section 77 of the PFMA and Treasury Regulation 3.1.10.Internal auditThe department had an internal audit function in operation throughout the financialyear.The internal audit function operates in terms of an approved internal audit plan.The internal audit function substantially fulfilled its responsibilities for the year, as setout in Treasury Regulation 3.2.Other matters of governanceThe annual financial statements were submitted for audit as per the legislated deadlinesper section 40 of the PFMA.The financial statements submitted for audit were not subject to any materialamendments resulting from the audit.No significant difficulties were experienced during the audit concerning delays orthe unavailability of expected information and/or the unavailability of senior management.xxxxxxxxxThe prior year’s external audit recommendations have been substantially implemented.SCOPA resolutions have been substantially implemented.OTHER REPORTING RESPONSI-BILITIESREPORT ON PERFORMANCE INFORMATION21. I have reviewed the performance information asset out on pages 20 to 21.Responsibility of the accounting officer for theperformance information22. The accounting officer has additionalresponsibilities as required by section 40(3)(a) ofthe PFMA to ensure that the annual report andaudited financial statements fairly present theperformance against predetermined objectivesof the department.Responsibility of the Auditor-General23. I conducted my engagement in accordance withsection 13 of the PAA read with General Notice616 of 2008, issued in Government Gazette No.31057 of 15 May 2008.24. In terms of the foregoing my engagement includedperforming procedures of an audit nature toobtain sufficient appropriate evidence about theperformance information and related systems,processes and procedures. The proceduresselected depend on the auditor’s judgement.25. I believe that the evidence I have obtained issufficient and appropriate to provide a basis forthe audit findings reported below.xx67

Audit findings (performance information)Non-compliance with regulatory requirements26. The following instances of non-compliance withregulatory requirements were identified:• The accounting officer of the NPA did notprepare a strategic plan that is consistentwith the period covered by the medium termexpenditure framework for approval by therelevant executive authority, as required byTreasury Regulation 5.1.1. Contrary to thisrequirement, the strategic plan preparedby the NPA covers the period to the 2020financial year; and• The strategic plan of the NPA did not includemeasurable objectives, expected outcomes,programme outputs, indicators (measures)and targets of the entity’s programmes, asrequired by Treasury Regulation 5.2.3(d).OTHER REPORTSPerformance audit28. A performance audit was conducted during theyear under review concerning the NPA’s use ofconsultants and single source appointments forthe period April 2005 to September 2007. Thereport has not been finalised as yet.APPRECIATION29. The assistance rendered by the staff of the NPAduring the audit is sincerely appreciated.Measurable objectives not consistent27.I draw attention to the fact that the fivemeasurable objectives reported on in the annualreport of the NPA are materially inconsistentwhen compared with the predeterminedobjectives as per the strategic plan.68

NPA FINANCIALSTATEMENTS69

APPROPRIATION STATEMENTfor the year ended 31 March 20081. Programme 4 AdjustedAppropriationShifting ofFundsAppropriation per programme2007/08 2006/07Virement Final Actual Variance Expenditure Final ActualAppropriationExpenditureas % of Appropria-Expenditurefinal approtionpriationR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000Current payments 1,746,783 - 59,383 1,806,166 1,805,251 915 99.9% 1,565,703 1,502,152Transfers andsubsidiesPayment for capitalassets5,341 - (1,991) 3,350 3,268 82 97.6% 5,162 3,36852,567 - (817) 51,750 51,750 - 100.0% 14,220 30,234TOTAL 1,804,691 - 56,575 1,861,266 1,860,269 997 99.9% 1,585,085 1,535,754Reconciliation with Statement of FinancialPerformanceAdd:Departmental receipts 4,582 6,849CARA Fund Assistance - 31,800Local and foreign aid assistance received 2,864 1,047Actual amounts per Statements of FinancialPerformance (Total revenue)1,868,712 1,624,781Add:Local and foreign aid assistance 2,916 3,299CARA Fund Assistance 23,387 -Actual amounts per Statements of Financial Performance(Total expenditure)1,886,572 1,539,05370

APPROPRIATION STATEMENTfor the year ended 31 March 2008Appropriation per economic classification2007/08 2006/07AdjustedAppropriationShifting ofFundsVirement FinalAppropriationActualExpenditureVariance Expenditureas % of finalappropriationFinal ActualAppropriationexpenditureCurrentpaymentsCompensation ofemployeesGoods andservicesFinancial transactionsin assets andliabilitiesR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’0001,248,723 - (16,838) 1,231,885 1,230,642 1,243 99.9% 1,060,485 1,060,485498,060 - 75,261 573,321 573,673 (352) 100.1% 505,085 441,534- - 960 960 936 24 97.5% 133 133Transfers andsubsidiesProvinces andmunicipalities200 - (108) 92 - 92 0.0% 2,890 1,096Households 5,141 - (1,883) 3,258 3,268 (10) 100.3% 2,272 2,272Payments forcapital assetsBuildings andother fixed structuresMachinery andequipmentSoftware & otherintangible assets- - 57 57 57 - 100.0% - -46,567 - 1,415 47,982 47,982 - 100.0% 14,220 15,6926,00 - (2,289) 3,711 3,711 - 100.0% - 14,542TOTAL 1,804,691 - 56,575 1,861,266 1,860,269 997 99.9% 1,585,085 1,535,75471

APPROPRIATION STATEMENTfor the year ended 31 March 20082007/08 2006/07Programme persubprogrammeShifting ofFundsVirementAdjustedAppropriationFinalAppropriationActualExpenditureVarianceExpenditureas % offinal appropriationFinalAppropriationActualExpenditurePublicProsecutionsR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’000Current payment 1,370,013 - 50,321 1,420,334 1,419,419 915 99.9% 1,227,076 1,166,195Transfers andsubsidiesPayment for capitalassets3,949 - (1,558) 2,391 2,309 82 96.6% 4,540 2,74628,973 - (1,359) 27,614 27,614 - - 13,856 28,237SpecialOperationsCurrentpaymentsTransfers andsubsidiesPayment for capitalassets229,505 - 19,098 248,603 248,603 - 100.0% 220,106 218,6551,328 - (404) 924 924 - 100.0% 587 58721,782 - 986 22,768 22,768 - 100.0% 232 1,865WitnessProtectionCurrent payments 95,414 - (17,446) 77,968 77,968 - 100.0% 69,796 68,969Transfers andsubsidiesPayment forcapital assets26 - (21) 5 5 - 100.0% 8 81,812 - (467) 1,345 1,345 - 100.0% 56 56Asset ForfeitureUnitCurrent payments 51,851 - 7,410 59,261 59,261 - 100.0% 48,725 48,333Transfers andsubsidiesPayment for capitalassets38 - (8) 30 30 - 100.0% 27 27- - 23 23 23 - 100.0% 76 76TOTAL 1,804,691 - 56,575 1,861,266 1,860,269 997 99.9% 1,585,085 1,535,75472

APPROPRIATION STATEMENTfor the year ended 31 March 20082007/08 2006/07Shifting ofFundsVirementActualExpenditureVarianceEconomic ClassificationAdjustedAppropriationFinalAppropriationExpenditureas % of finalappropriationFinalAppropriationActualexpenditureCurrentpaymentsCompensation ofemployeesGoods andservicesFinancial transactionsin assets andliabilitiesR’000 R’000 R’000 R’000 R’000 R’000 % R’000 R’0001,248,723 - (16,838) 1,231,885 1,230,642 1,243 99.9% 1,060,485 1,060,485498,060 - 75,261 573,321 573,673 (352) 100.1% 505,085 441,534- - 960 960 936 24 97.5% 133 133Transfers andsubsidiesProvinces andmunicipalities200 - (108) 92 - 92 0.0% 2,890 1,096Households 5,141 - (1,883) 3,258 3,268 (10) 100.3% 2,272 2,272Payments forcapital assetsBuildings andother fixed structuresMachinery andequipmentSoftware & otherintangible assets- - 57 57 57 - 100.0% - -46,567 - 1,415 47,982 47,982 - 100.0% 14,220 15,6926,000 - (2,289) 3,711 3,711 - 100.0% - 14,542Total 1,804,691 - 56,575 1,861,266 1,860,269 997 99.9% 1,585,085 1,535,75473

NOTES TO THE APPROPRIATIONSTATEMENTfor the year ended 31 March 20081 Detail of transfers and subsidies as perAppropriation Act (after Virement):Detail of these transactions can be viewed innote 7 (Transfers and subsidies) and Annexure 1(A-B) to the Annual Financial Statements.2 Detail of specifically and exclusively appropriatedamounts voted (after Virement):Detail of these transactions can be viewed innote 1 (Annual Appropriation) to the AnnualFinancial Statements.3 Detail on financial transactions in assets andliabilities:Detail of these transactions per programmecan be viewed in note 6 (Financial transactionsin assets and liabilities) to the Annual FinancialStatements.4 Explanations of material variances from AmountsVoted (after Virement):4.1 Per Programme FinalAppropriationActualExpenditureVarianceVariance as ofFinal AppropriationR’000 R’000 R’000 %Programme 4 1,861,266 1,860,269 997 0.05%There are no material variances. The R 997 variance relates to Compensation of Employees, due to funded vacancies within the NPA.4.2 Per Economic classification FinalAppropriationActualExpenditureVarianceVariance as ofFinal AppropriationR’000 R’000 R’000 %Current payments:Compensation of employees 1,231,885 1,230,642 1,243 0.10%Goods and services 573,321 573,673 (352) 0.06%Interest and rent on land - - - 0.00%Financial transactions in assets and liabilities 960 936 24 2.50%Transfers and subsidies:Provinces and municipalities 92 - 92 0.00%Households 3,258 3,268 (10) (0.31)%Payments for capital assets:Buildings and other fixed structures 57 57 - 0.00%Machinery and equipment 47,982 47,982 - 0.00%Software and other intangible assets 3,711 3,711 - 0.00%5 The sub-programmes within the NPA(Programme 4) have been restated in the 2007ENE in order to separate the Asset Forfeiture Unitfrom the Special Operations Unit. This resulted inthe NPA reporting in the 2007/08 financial year on4 sub-programmes instead of 3, as in prior years.The comparative figures in the AppropriationStatement have been restated accordingly.74

STATEMENT OF FINANCIAL PERFORMANCEfor the year ended 31 March 2008Description Note 2007/08R’0002006/07R’000REVENUEAnnual appropriation 1. 1,861,266 1,585,085Departmental revenue 2. 4,582 6,849CARA Fund assistance 3A. - 31,800Local and foreign aid assistance 3. 2,864 1,047TOTAL REVENUE 1,868,712 1,624,781EXPENDITURECurrent expenditureCompensation of employees 4. 1,230,642 1,060,485Goods and services 5. 573,673 441,534Financial transactions in assets and liabilities 6. 936 133CARA Fund assistance 3A. 9,115 -Local and foreign aid assistance 3. 2,916 3,142Total current expenditure 1,817,282 1,505,294Transfers and subsidies 7. 3,268 3,368Expenditure for capital assetsBuildings and other fixed structures 8. 57 -Machinery and equipment 8. 47,982 15,692Software and Other Intangible Assets 8. 3,711 14,542CARA Fund assistance 3A. 14,272 -Local and foreign aid assistance 3. - 157Total expenditure for capital assets 66,022 30,391TOTAL EXPENDITURE 1,886,572 1,539,053SURPLUS/(DEFICIT) (17,860) 85,728Add back fruitless and wasteful expenditure 9. 236 372SURPLUS/(DEFICIT) FOR THE YEAR (17,624) 86,100Reconciliation of Surplus/(Deficit) for the yearVoted Funds 13. 1,233 49,703Departmental Revenue 14. 4,582 6,849Local and foreign aid assistance 3. (52) (2,252)CARA Fund assistance 3A. (23,387) 31,800SURPLUS/(DEFICIT) FOR THE YEAR (17,624) 86,10075

STATEMENT OF FINANCIAL POSITIONas at 31 March 2008Description Note 2007/08R’0002006/07R’000ASSETSCurrent assets 66,638 109,820Fruitless and wasteful expenditure 9. 3,021 2,797Cash and cash equivalents 10. 95 63,030Prepayments and advances 11. 22,914 23,245Receivables 12. 39,999 19,944Local and foreign aid assistance receivable 3. 609 804TOTAL ASSETS 66,638 109,820LIABILITIESCurrent liabilities 55,923 75,696Voted funds to be surrendered to the Revenue Fund 13. 1,233 49,703Departmental revenue to be surrendered to the Revenue Fund 14. 22,692 22,543Bank overdraft 15 29,091 -Payables 16. 757 1,053Local and foreign aid assistance unutilised 3. 2,150 2,397TOTAL LIABILITIES 55,923 75,696NET ASSETS 10,715 34,124Represented by:Recoverable revenue 2,302 2,324Retained funds (Legislatures/Parliament/CARA Fund assistance) 8,413 31,800TOTAL 10,715 34,12476

STATEMENT OF CHANGES IN NET ASSETSfor the year ended 31 March 2008Description Note 2007/08R’0002006/07R’000Recoverable revenueOpening balance 2,324 685TransfersDebts raised (22) 1,639Closing balance 2,302 2,324Retained fundsOpening balance 31,800 -CARA Fund assistance 3A. (23,387) 31,800Closing balance 8,413 31,800TOTAL 10,715 34,12477

CASH FLOW STATEMENTfor the year ended 31 March 2008Description Note 2007/08R’0002006/07R’000CASH FLOWS FROM OPERATING ACTIVITIESReceipts 1,868,712 1,624,781Annual appropriated funds received 1.1 1,861,266 1,585,085Departmental revenue received 2. 4,582 6,849CARA Fund assistance received 3A. - 31,800Local and foreign aid assistance received 3. 2,864 1,047Net (increase)/decrease in working capital (20,244) (9,938)Surrendered to Revenue Fund (54,136) (53,275)Current payments (1,817,046) (1,519,464)Transfers and subsidies paid (3,268) (3,368)Net cash flow available from operating activities 17. (25,982) 38,736CASH FLOWS FROM INVESTING ACTIVITIESPayments for capital assets (66,022) (15,849)Net cash flows from investing activities (66,022) (15,849)CASH FLOWS FROM FINANCING ACTIVITIESIncrease/(decrease) in net assets (22) 1,639Net cash flows from financing activities (22) 1,639Net increase/(decrease) in cash and cash equivalents (92,026) 24,526Cash and cash equivalents at the beginning of the period 63,030 38,504Cash and cash equivalents at end of period 18. (28,996) 63,03078

ACCOUNTING POLICIESfor the year ended 31 March 2008The Financial Statements have been prepared inaccordance with the following policies, which havebeen applied consistently in all material aspects,unless otherwise indicated. However, whereappropriate and meaningful, additional informationhas been disclosed to enhance the usefulness ofthe Financial Statements and to comply with thestatutory requirements of the Public FinanceManagement Act, Act 1 of 1999 (as amended byAct 29 of 1999), and the Treasury Regulationsissued in terms of the Act and the Division ofRevenue Act, Act 2 of 2006.1. Presentation of the FinancialStatements1.1 Basis of preparationThe Financial Statements have been preparedon a modified cash basis of accounting, exceptwhere stated otherwise. The modified cashbasis constitutes the cash basis of accountingsupplemented with additional disclosureitems. Under the cash basis of accountingtransactions and other events are recognisedwhen cash is received or paid.1.2 Presentation currencyAll amounts have been presented in thecurrency of the South African Rand (R)which is also the functional currency of thedepartment.1.3 RoundingUnless otherwise stated all financial figureshave been rounded to the nearest onethousand Rand (R’000).1.4 Comparative figuresPrior period comparative information hasbeen presented in the current year’s financialstatements. Where necessary figures includedin the prior period financial statements havebeen reclassified to ensure that the formatin which the information is presented isconsistent with the format of the currentyear’s financial statements.1.5 Comparative figures - AppropriationStatementA comparison between actual amounts andfinal appropriation per major classification ofexpenditure is included in the appropriationstatement.2. Revenue2.1 Appropriated fundsAppropriated funds are recognised in thefinancial records on the date the appropriationbecomes effective. Adjustments to theappropriated funds made in terms of theadjustments budget process are recognisedin the financial records on the date theadjustments become effective.Total appropriated funds are presented in thestatement of financial performance.Unexpended appropriated funds aresurrendered to the National/ProvincialRevenue Fund. Amounts owing to theNational/Provincial Revenue Fund at the endof the financial year are recognised in thestatement of financial position.2.2 Departmental revenueAll departmental revenue is paid into theNational/Provincial Revenue Fund whenreceived, unless otherwise stated. Amountsowing to the National/Provincial Revenue Fundat the end of the financial year are recognisedin the statement of financial position.Amounts receivable at the reporting date aredisclosed in the disclosure notes to the annualfinancial statements.2.2.1 Tax revenueTax revenue consists of all compulsoryunrequited amounts collected by thedepartment in accordance with laws andor regulations (excluding fines, penalties &79

forfeits).Tax receipts are recognised in the statementof financial performance when received.2.2.2 Sales of goods and services otherthan capital assetsThe proceeds received from the sale ofgoods and/or the provision of services arerecognised in the Statement of FinancialPerformance when the cash is received.2.2.3 Fines, penalties & forfeitsFines, penalties & forfeits are compulsoryunrequited amounts which were imposedby a court or quasi-judicial body andcollected by the department. Revenuearising from fines, penalties and forfeits isrecognised in the Statement of FinancialPerformance when the cash is received.2.2.4 Interest, dividends and rent onlandInterest, dividends and rent on land arerecognised in the statement of financialperformance when the cash is received.2.2.5 Sale of capital assetsThe proceeds received on sale of capitalassets are recognised in the Statement ofFinancial Performance when the cash isreceived.2.2.6 Financial transactions in assetsand liabilitiesRepayments of loans and advancespreviously extended to employees andpublic corporations for policy purposes arerecognised as revenue in the Statement ofFinancial Performance on receipt of thefunds.Cheques issued in previous accountingperiods that expire before being bankedare recognised as revenue in the Statementof Financial Performance when the chequebecomes stale. When the cheque is reissuedthe payment is made from Revenue.Forex gains are recognised on payment offunds.2.2.7 Transfers received (including gifts,donations and sponsorships)All cash gifts, donations and sponsorshipsare paid into the National/ProvincialRevenue Fund and recorded as revenuein the Statement of Financial Performancewhen received. Amounts receivable at thereporting date are disclosed in the disclosurenotes to the financial statements.All in-kind gifts, donations and sponsorshipsare disclosed at fair value in an annexure tothe financial statements.2.3 Local and foreign aid assistanceLocal and foreign aid assistance is recognisedas revenue when notification of the assistanceis received from the National Treasury orwhen the department directly receives thecash from the donor(s).All in-kind local and foreign aid assistance aredisclosed at fair value in the annexures to theannual financial statements.The cash payments made during the yearrelating to local and foreign aid assistanceprojects are recognised as expenditure in theStatement of Financial Performance. The valueof the assistance expensed prior to the receiptof the funds is recognised as a receivable inthe statement of financial position.Inappropriately expensed amounts using localand foreign aid assistance and any unutilisedamounts are recognised as payables in thestatement of financial position.2.4 CARA Fund assistanceAll CARA funds received must be recorded asrevenue when funds are received. The cashpayments made during the year relating toCARA earmarked projects are recognised ascurrent or capital expenditure in the statementof financial performance.Any unspent CARA funds are transferred toRetained Funds as these funds do not needto be surrendered to the National RevenueFund.80

3. Expenditure3.1 Compensation of employees3.1.1 Short-term employee benefitsSalaries and wages comprise payments toemployees (including leave entitlements,thirteenth cheques and performancebonuses). Salaries and wages are recognisedas an expense in the Statement of FinancialPerformance when final authorisationfor payment is effected on the system(by no later than 31 March of each year).Capitalised compensation forms part ofthe expenditure for capital assets in theStatement of Financial Performance 2 .All other payments are classified as currentexpense.Short-term employee benefits that give riseto a present legal or constructive obligationare disclosed in the disclosure notes to thefinancial statements. These amounts arenot recognised in the Statement of FinancialPerformance or Position.3.1.2 Post retirement benefitsThe department provides retirementbenefits (pension benefits) for certain ofits employees through a defined benefitplan for government employees. Thesebenefits are funded by both employer andemployee contributions.Employer contributions (i.e. socialcontributions) to the fund are expensedwhen the final authorisation for paymentto the fund is effected on the system (byno later than 31 March of each year).No provision is made for retirementbenefits in the financial statements of thedepartment. Any potential liabilities aredisclosed in the financial statements of theNational/Provincial Revenue Fund and notin the financial statements of the employerdepartment.The department provides medical benefitsfor certain of its employees. Employercontributions to the medical funds areexpensed when final authorisation forpayment to the fund is effected on thesystem (by no later than 31 March of eachyear).3.1.3 Termination benefitsTermination benefits such as severancepackages are recognised as an expense inthe Statement of Financial Performance asa transfer (to households) when the finalauthorisation for payment is effected onthe system (by no later than 31 March ofeach year).3.1.4 Other long-term employeebenefitsOther long-term employee benefits(such as capped leave) are recognised asan expense in the Statement of FinancialPerformance as a transfer (to households)when the final authorisation for paymentis effected on the system (by no later than31 March of each year).Long-term employee benefits that give riseto a present legal or constructive obligationare disclosed in the disclosure notes to thefinancial statements. These amounts arenot recognised in the Statement of FinancialPerformance or Position.3.2 Goods and servicesPayments made for goods and/or services arerecognised as an expense in the Statementof Financial Performance when the finalauthorisation for payment is effected on thesystem (by no later than 31 March of each year).The expense is classified as capital if the goodsand services were used for a capital projector an asset of R5000 or more is purchased.All assets costing less than R5000 will also bereflected under goods and services.3.3 Interest and rent on landInterest and rental payments are recognisedas an expense in the Statement of FinancialPerformance when the final authorisationfor payment is effected on the system (by nolater than 31 March of each year). This itemexcludes rental for the use of buildings or2This accounting policy is only relevant where the department elects to capitalise the compensation paid to employees involved on capital projects.81

other fixed structures. If it is not possible todistinguish between payment for the use ofland and the fixed structures on it, the wholeamount should be recorded under goods andservices.3.4 Financial transactions in assets andliabilitiesDebts are written off when identified asirrecoverable. Debts written off are limited tothe amount of savings and/or under spendingof appropriated funds. The write-off occursat year-end or when funds are available. Noprovision is made for irrecoverable amountsbut amounts are disclosed as a disclosurenote.Forex losses are recognised on payment offunds.All other losses are recognised whenauthorisation has been granted for therecognition thereof.3.5 Unauthorised expenditureWhen discovered, unauthorised expenditureis recognised as an asset in the statementof financial position until such time as theexpenditure is either approved by the relevantauthority, recovered from the responsibleperson or written off as irrecoverable in theStatement of Financial Performance.Unauthorised expenditure approved withfunding is recognised in the Statement ofFinancial Performance when the unauthorisedexpenditure is approved and the relatedfunds are received. Where the amount isapproved without funding it is recognised asexpenditure, subject to availability of savings,in the Statement of Financial Performance onthe date of approval.3.6 Fruitless and wasteful expenditureFruitless and wasteful expenditure is recognisedas an asset in the statement of financial positionuntil such time as the expenditure is recoveredfrom the responsible person or written off asirrecoverable in the Statement of FinancialPerformance.3.7 Irregular expenditureIrregular expenditure is recognised asexpenditure in the Statement of FinancialPerformance. If the expenditure is notcondoned by the relevant authority it is treatedas an asset until it is recovered or written offas irrecoverable.3.8 Transfers and subsidiesTransfers and subsidies are recognised asan expense when the final authorisation forpayment is effected on the system (by no laterthan 31 March of each year).3.9 Expenditure for capital assetsPayments made for capital assets are recognisedas an expense in the Statement of FinancialPerformance when the final authorisation forpayment is effected on the system (by no laterthan 31 March of each year).4. Assets4.1 Cash and cash equivalentsCash and cash equivalents are carried in thestatement of financial position at cost.For the purposes of the cash flow statement,cash and cash equivalents comprise cash onhand, deposits held, other short-term highlyliquid investments and bank overdrafts.4.2 Other financial assetsOther financial assets are carried in theStatement of Financial Position at cost.4.3 Prepayments and advancesAmounts prepaid or advanced are recognisedin the statement of financial position when thepayments are made.Pre-payments and advances outstanding at theend of the year are carried in the statement offinancial position at cost.82

4.4 ReceivablesReceivables included in the statement offinancial position arise from cash paymentsmade that are recoverable from anotherparty.Receivables outstanding at year-end arecarried in the statement of financial positionat cost.4.5 InvestmentsCapitalised investments are shown at cost inthe statement of financial position. Any cashflows such as dividends received or proceedsfrom the sale of the investment are recognisedin the statement of financial performancewhen the cash is received.Investments are tested for an impairment losswhenever events or changes in circumstancesindicate that the investment may be impaired.Any loss is included in the disclosure notes.4.6 LoansLoans are recognised in the statement offinancial position at the nominal amount whencash is paid to the beneficiary. Loan lances arereduced when cash repayments are receivedfrom the beneficiary. Amounts that arepotentially irrecoverable are included in thedisclosure notes.Loans that are outstanding at year-end arecarried in the statement of financial positionat cost.4.7 InventoryInventories purchased during the financial yearare disclosed at cost in the notes.4.8 Capital assetsA capital asset is recorded on receipt of theitem at cost. Cost of an asset is defined asthe total cost of acquisition. Where the costcannot be determined accurately, the capitalasset should be stated at fair value. Where fairvalue cannot be determined, the capital assetis included in the asset register at R1.Projects (of construction/development) runningover more than one financial year relatingto assets, are only capitalised as assets oncompletion of the project and at the total costincurred over the duration of the project.Disclosure Notes 27 and 28 reflect the totalmovement in the asset register for the currentfinancial year.5. Liabilities5.1 Voted funds to be surrendered to theRevenue FundUnexpended appropriated funds aresurrendered to the National/ProvincialRevenue Fund. Amounts owing to theNational/Provincial Revenue Fund at the endof the financial year are recognised in theStatement of Financial Position.5.2 Departmental revenue to besurrendered to the Revenue FundAmounts owing to the National/ProvincialRevenue Fund at the end of the financial yearare recognised in the statement of financialposition at cost.5.3 Bank overdraftThe bank overdraft is carried in the statementof position at cost.5.4 PayablesRecognised payables mainly comprise ofamounts owing to other governmental entities.These payables are recognised at historicalcost in the statement of financial position.5.5 Contingent liabilitiesContingent liabilities are included in thedisclosure notes.83

5.6 CommitmentsCommitments are not recognised in thestatement of financial position as a liability oras expenditure in the statement of financialperformance but are included in the disclosurenotes.5.7 AccrualsAccruals are not recognised in the statement offinancial position as a liability or as expenditurein the statement of financial performance butare included in the disclosure notes.5.8 Employee benefitsShort-term employee benefits that give riseto a present legal or constructive obligationare disclosed in the disclosure notes to thefinancial statements. These amounts arenot recognised in the statement of financialperformance or the statement of financialposition.7. Net Assets7.1 Recoverable revenueAmounts are recognised as recoverablerevenue when a payment made in a previousfinancial year becomes recoverable from adebtor in the current financial year.8. Related party transactionsSpecific information with regards to relatedparty transactions is included in the disclosurenotes.9. Key management personnelCompensation paid to key managementpersonnel including their family memberswhere relevant, is included in the disclosurenotes.5.9 Lease commitmentsLease commitments are not recognised in thestatement of financial position as a liability oras expenditure in the statement of financialperformance but are included in the disclosurenotes.Operating and finance lease commitments areexpensed when the payments are made. Assetsacquired in terms of finance lease agreementsare disclosed in the annexures and disclosurenotes to the financial statements.6. Receivables for departmentalrevenueReceivables for departmental revenue aredisclosed in the disclosure notes to the annualfinancial statements.84

NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 20081. Annual Appropriation1.1 Annual AppropriationIncluded are funds appropriated in terms of the Appropriation Act for National Departments (Voted funds)and Provincial Departments :FinalAppropriationActual FundsReceivedFunds notrequested/not receivedAppropriationreceived2006/07R’000 R’000 R’000 R’000Programme 4: National Prosecuting Authority 1,861,266 1,861,266 - 1,585,085Total 1,861,266 1,861,266 - 1,585,0852. Departmental revenueNote 2007/08R’0002006/07R’000Sales of goods and services other than capital assets 2.1 952 851Interest, dividends and rent on land 2.2 544 358Financial transactions in assets and liabilities 2.3 1,678 5,640Transfers received 2.4 1,408 -Departmental revenue collected 4,582 6,8492.1 Sales of goods and services other than capital assets2007/08 2006/07Sales of goods and services produced by the departmentSales by market establishment 952 851Total 952 8512.2 Interest, dividends and rent on land and buildings2007/08 2006/07Interest 544 358Total 544 3582.3 Financial transactions in assets and liabilities(Nature of recovery)2007/08 2006/07Stale cheques written back 14 22Other Receipts including Recoverable Revenue 1,664 5,618Total 1,678 5,64085

2.4 Transfers received2007/08 2006/07Foreign governments 1,271 -Public corporations and private enterprises 137 -Total 1,408 -3. Local and foreign aid assistance3.1 Assistance received in cash: OtherNote 2007/08R’0002006/07R’000LocalOpening Balance (660) (220)Revenue - 965Revenue Adjustment 51 -Expenditure - 1,405Current - 1,263Capital - 142Closing Balance (609) (660)ForeignOpening Balance 2,253 4,065Revenue 2,813 82Expenditure 2,916 1,894Expenditure Adjustment 1,712 -Current 1,204 1,879Capital - 15Closing Balance 2,150 2,253Total assistanceOpening Balance 1,593 3,845Total Revenue 2,864 1,047Revenue 2,813 1,047Revenue Adjustment 51 -Total Expenditure 2,916 3,299Expenditure Adjustment 1,712 -Current 1,204 3,142Capital - 157Closing Balance 1,541 1,593Analysis of balanceLocal and foreign aid receivable (609) 804Local and foreign aid unutilised 2,150 2,397Closing balance 1,541 1,59386

The amounts mentioned below represent adjustments processed during the financial year for assistancereceived in cash:LocalThe Revenue of R 51 is represented by the following:Rectification to Vodacom expenditure allocationsWoolworths: unspent funds transferred to Revenue to be surrendered to NRFHuman Rights Foundation: allocated to RevenueBAC: unspent funds transferred to Revenue to be surrendered to NRFTotal(33)137(161)6(51)ForeignThe expense for the current financial year was increased with R 1,712 represented by the following adjustments:Unicef: unspent funds surrendered to RDP fundUnicef: VAT refund receivedWK Kellog: unspent funds surrendered to RDP fundWK Kellog: VAT refund receivedUSAid: unspent funds surrendered to RDP fundGreece: unspent funds transferred to Revenue to be surrendered to NRFGreece: VAT refund receivedTotal385(198)187908(3)293363(36)1,7123.2 CARA Fund assistanceNote 2007/08R’0002006/07R’000Opening Balance 31,800 -Revenue received - 31,800Expenditure 23,387 -Current 9,115 -Capital 14,272 -Closing Balance 8,413 31,80087

4. Compensation of employees4.1 Salaries and WagesNote 2007/08R’0002006/07R’000Basic salary 894,566 773,181Performance award 21,646 18,592Service Based 625 524Compensative/circumstantial 10,071 4,494Other non-pensionable allowances 154,509 134,707Total 1,081,417 931,4984.2 Social contributions2007/08 2006/074.2.1 Employer contributionsPension 112,765 97,950Medical 36,341 30,929UIF 19 3Bargaining council 100 105Total 149,225 128,987Total compensation of employees 1,230,642 1,060,485Average number of employees 4,268 4,04488

5.1 External audit feesNote 2007/08R’0002006/07R’000Regulatory audits 3,604 2,691Total 3,604 2,6915.2 Inventory2007/08 2006/07Domestic consumables 834 241Food and Food supplies 1 4Fuel, oil and gas 1 1Other consumables 127 1Parts and other maintenance material 85 94Sport and recreation 23 -Stationery and printing 21,936 12,573Medical supplies 1 1Weapons and armaments 371 1,489Total 23,379 14,4045.3 Travel and subsistence2007/08 2006/07Local 85,831 62,350Foreign 5,014 3,187Total 90,845 65,53790

6. Financial transactions in assets and liabilitiesNote 2007/08R’0002006/07R’000Material losses through criminal conductOther material losses written off 6.1 - 1Debts written off 6.2 936 132Total 936 1336.1 Other material losses written off2007/08 2006/07Nature of lossesDuplicate Payment Written off - 1Total - 16.2 Debts written off2007/08 2006/07Nature of debts written offBad debt written off 936 132Total 936 1327. Transfers and subsidiesNote 2007/08R’0002006/07R’000Provinces and municipalities Annexure 1A - 1,096Households Annexure 1B 3,268 2,272Total 3,268 3,3688. Expenditure for capital assetsNote 2007/08R’0002006/07R’000Buildings and other fixed structures 27. 57 -Machinery and equipment 27. 47,982 15,692Software and other intangible assets 3,711 14,542Computer software 28. 3,711 14,542Total 51,750 30,23491

9. Fruitless and wasteful expenditureReconciliation of fruitless and wasteful expenditureNote 2007/08R’0002006/07R’000Opening balance 2,797 2,425Fruitless and wasteful expenditure – current year 236 372Current 236 372Capital - -Amounts condonedCurrent expenditure - -Transfers and subsidies - -Expenditure for capital assets - -Transfer to receivables for recovery (not condoned) (12) -Fruitless and wasteful expenditure awaiting condonement 3,021 2,797Analysis of Current Year Fruitless and wasteful expenditureIncidentDisciplinary steps taken/criminal proceedingsAccident FeesCancellation FeesUnder investigation.Awaiting report from IMU and Security and RiskUnder investigation.Letters sent to officials to obtain explanations.43191Journal Corrections 2Total 23610. Cash and cash equivalentsNote 2007/08R’0002006/07R’000Consolidated Paymaster General Account - 62,912Disbursements - 33Cash on hand 95 85Total 95 63,03092

11. Prepayments and advancesNote 2007/08R’0002006/07R’000Travel and subsistence 1,015 1,346Prepayments 21,899 21,899Total 22,914 23,24512. ReceivablesNote 2007/08R’0002006/07R’000Less than oneyearOne to threeyearsOlder thanthree yearsTotalTotalStaff debtors 12.1 1,132 4,139 5,311 10,582 12,184Other debtors 12.2 214 (1,177) 1,522 559 3,574Intergovernmental receivablesAnnex 3 28,817 41 - 28,858 4,186Total 30,163 3,003 6,833 39,999 19,94412.1 Staff Debtors2007/08 2006/07Sal: Disallowance Account: CA 205 318Sal: Tax Debt: CA 26 21Debt Account: CA 10,271 11,541Sal: Reversal Control 15 230Irregular Expenditure: Dept Vote Account 33 33Sal: Medical Aid 32 41Total 10,582 12,18412.2 Other debtors2007/08 2006/07Disallowance Miscellaneous 309 1,293Private Telephone 96 99Telephone Control Account - 2,061VAT Clearing Account 154 121Total 559 3,57493

13. Voted funds to be surrendered to the Revenue FundNote 2007/08R’0002006/07R’000Opening balance 49,703 47,934Transfer from Statement of Financial Performance 1,233 49,703Paid during the year (49,703) (47,934)Closing balance 1,233 49,70314. Departmental revenue to be surrendered to the Revenue FundNote 2007/08R’0002006/07R’000Opening balance 22,543 21,035Transfer from Statement of Financial Performance 4,582 6,849Paid during the year (4,433) (5,341)Closing balance 22,692 22,54315. Bank overdraftNote 2007/08R’0002006/07R’000Consolidated Paymaster General Account 29,091 -Total 29,091 -16. Payables - currentNote 2007/08R’0002006/07R’00030 Days 30+ Days Total TotalAmounts owing to other entities Annex.5 - - - -Advances received 16.1 - - - 287Clearing accounts 16.2 - 757 757 766Total - 757 757 1,05394

16.1 Advances received2007/08 2006/07Claims National Departments - IJS Funds - 287Total - 28716.2 Clearing accounts2007/08 2006/07Sal: Reg Service Council 49 -Sal: Pension Fund 86 58Sal Income Tax 424 405Sal: ACB Recalls 15 54Pension Recoverable Account 112 204Disallowance Miscellaneous 47 45Telephone Erroneous Interface Ac CL 24 -Total 757 76617. Net cash flow available from operating activitiesNote 2007/08R’0002006/07R’000Net surplus/(deficit) as per Statement of Financial Performance (17,624) 86,100Add back non-cash/cash movements not deemed operating activities (8,358) (47,364)(Increase)/decrease in receivables – current (20,055) (8,765)(Increase)/decrease in prepayments and advances 331 402(Increase)/decrease in other current assets (224) (557)Increase/(decrease) in payables – current (296) (1,203)Expenditure on capital assets 66,022 15,849Surrenders to Revenue Fund (54,136) (53,275)Other non-cash items - 185Net cash flow generated by operating activities (25,982) 38,73695

18. Reconciliation of cash and cash equivalents for cash flow purposesNote 2007/08R’0002006/07R’000Consolidated Paymaster General account (29,091) 62,912Disbursements - 33Cash on hand 95 85Total (28,996) 63,03096

DISCLOSURE NOTES TO THE ANNUAL FINANCIALSTATEMENTSfor the year ended 31 March 200819. Contingent liabilitiesNote 2007/08R’0002006/07R’000Liable toNatureMotor vehicle guarantees Employees Annex 2A 156 459Housing loan guarantees Employees Annex 2A 4,743 5,553Claims against the department Annex 2B 539,282 325,781Other departments (interdepartmental unconfirmed balances) Annex 4 103 66Total 544,284 331,85920. CommitmentsNote 2007/08R’0002006/07R’000Current expenditureApproved and contracted 680,823 758,136Approved but not yet contracted 4,961 -685,784 758,136Non-current expenditureApproved and contracted 798 32,747798 32,747Total Commitments 686,582 790,88321. Accruals2007/08R’0002006/07R’000Listed by economic classification 30 Days 30+ Days Total TotalCompensation of employees 80 291 371 65Goods and services 8,915 31,292 40,207 32,422Transfers and subsidies 6 485 491 1Machinery and equipment 17 115 132 8,757Total 9,018 32,183 41,201 41,24597

Note 2007/08R’0002006/07R’000Listed by programme levelPublic Prosecution 31,059 24,980Special Operations 7,082 14,060Witness Protection 1,743 2,205Asset Forfeiture 1,317 -Total 41,201 41,245Confirmed balances with other departments Annex 4 201 1,878Total 201 1,87822. Employee benefitsNote 2007/08R’0002006/07R’000Leave entitlement 64,061 47,851Thirteenth cheque 34,779 33,288Performance awards 22,367 18,049Capped leave commitments 108,009 98,486Total 229,216 197,67498

23. Lease Commitments23.1 Operating leases2007/2008 Vehicles Buildings andother fixedstructuresMachinery andequipmentTotalR’000 R’000 R’000 R’000Not later than 1 year - 4,861 - 4,861Later than 1 year and not later than 5 years - 22,907 - 22,907Later than five years - 17,211 - 17,211Total present value of lease liabilities - 44,979 - 44,9792006/2007 Vehicles Buildings andother fixedstructuresMachinery andequipmentTotalR’000 R’000 R’000 R’000Not later than 1 year - 4,672 - 4,672Later than 1 year and not later than 5 years - 39,792 - 39,792Later than five years - - - -Total present value of lease liabilities - 44,464 - 44,46423.2 Finance leases2007/2008 Vehicles Buildings andother fixedstructuresMachinery andequipmentTotalR’000 R’000 R’000 R’000Not later than 1 year 11,616 9,918 19,509 41,043Later than 1 year and not later than 5 years 3,238 34,509 22,255 60,002Later than five years - - - -Total present value of lease liabilities 14,854 44,427 41,764 101,0452006/2007 Vehicles Buildings andother fixedstructuresMachinery andequipmentTotalR’000 R’000 R’000 R’000Not later than 1 year 12,184 9,528 18,159 39,871Later than 1 year and not later than 5 years 11,218 42,800 45,122 99,140Later than five years - 12,807 - 12,807Total present value of lease liabilities 23,402 65,135 63,281 151,81899

24. Irregular expenditure24.1 Reconciliation of irregular expenditureNote 2007/08R’0002006/07R’000Opening balance 186,689 65,341Add: Irregular expenditure – current year 240,008 121,348Less: Amount condoned 11 -Current expenditure 11 -Less: Not condoned 3,220 -Current expenditure 3,220 -Irregular expenditure awaiting condonement 423,466 186,689Analysis of awaiting condonement per classificationCurrent expenditure 423,466 186,689423,466 186,689Analysis of awaiting condonement per age classificationCurrent 239,997 121,348Prior years 183,469 65,341Total 423,466 186,68924.2 Irregular expenditureIncidentDisciplinary steps taken/criminal proceedings2007/08 2006/07Cases (prior years)Irregular appointmentAwaiting National Treasury responseReferred to DPSA for condonement65,34168665,341686Rentworks PaymentsNoted casesCFM Finance LeaseCFM Soft services not in terms of contractAwaiting National Treasury responseStill under investigationAwaiting National Treasury responseAwaiting National Treasury response66,30912,45062,47735,69338,99610,66654,00017,000DSO contract Under investigation 600 -Delegation of powers for approving tenders Under investigation 113,311 -Performance audit of consultants Under investigation 54,621 -Tender irregularities Under investigation 11,978 -Total 423,466 186,689Noted cases for prior year were restated as a result of reviews done on the noted case register. It was identified that not all cases recorded were regarded asirregular expenditure since tender procedures were followed. As a result the R 10,666m was reduced by R 3,169m for prior year. The tender irregularitiesdisclosed relates to one Province. The scope of the tender irregularities was expanded to cover the whole tender to the amount of R 55,823m.The irregular expenditure amounts for the Performance Audit and Delegated powers for approving tenders include a few of the contract amounts.These amounts were included due to the fact that some of the suppliers were paid for different projects and to determine the disclosure note amount, contractamounts had to be used.These amounts are close to the expenditure and the variances are not material.100

25. Key management personnelNo. ofIndividuals2007/08R’0002006/07R’000Political office bearers (provide detail below) 1 1,081 4,475OfficialsLevel 15 to 16 23 20,058 15,256Level 14 (incl CFO if at a lower level) 15 9,896 6,372Total 31,035 26,10326. ProvisionsNo. ofIndividuals2007/08R’0002006/07R’000Staff Debtors 3,093 3,330Total 3,093 3,330101

27. Tangible Capital Assets27.1 MOVEMENT IN TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2008Opening balanceCurrent Year Adjustmentsto prioryear balancesAdditions Disposals Closing BalanceCost Cost Cost Cost CostR’000 R’000 R’000 R’000 R’000BUILDING AND OTHERFIXED STRUCTURES30,336 - 57 - 30,393Other fixed structures 30,336 - 57 - 30,393MACHINERY AND EQUIP-MENT49,404 34,335 51,077 - 134,816Computer equipment 35,946 (5,363) 21,723 - 52,306Furniture and Office equipment - 25,182 7,635 - 32,817Other machinery and equipment 13,458 14,516 21,719 - 49,693TOTAL TANGIBLE ASSETS 79,740 34,335 51,134 - 165,209The National Prosecuting Authority has Tangible Capital minor assets amounting to R 17,807 (2007: R 7,138)27.2 ADDITIONS TO TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2008Cash Non-cash (Capital Workin Progress currentcosts)Received current,not paid (Paid currentyear, receivedprior year)TotalCost Cost Cost Cost CostR’000 R’000 R’000 R’000 R’000BUILDING AND OTHERFIXED STRUCTURES57 - - - 57Other fixed structures 57 - - - 57MACHINERY ANDEQUIPMENT47,982 3,095 - - 51,077Computer equipment 18,628 3,095 - - 21,723Furniture and Office equipment 7,635 - - - 7,635Other machinery and equipment 21,719 - - - 21,719TOTAL 48,039 3,095 - - 51,134102

27.3 MOVEMENT IN TANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2007Opening balanceAdditions Disposals Closing balanceR’000 R’000 R’000 R’000BUILDING AND OTHER FIXED STRUCTURES 30,336 - - 30,336Other fixed structures 30,336 - - 30,336MACHINERY AND EQUIPMENT 30,504 18,900 - 49,404Computer equipment 21,241 14,705 - 35,946Other machinery and equipment 9,263 4,195 - 13,458TOTAL TANGIBLE ASSETS 60,840 18,900 - 79,740103

28. Intangible Capital Assets28.1 MOVEMENT IN INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2008Opening balanceCurrent Year Adjustmentsto prioryear balancesAdditions Disposals Closing BalanceCost Cost Cost Cost CostR’000 R’000 R’000 R’000 R’000Capitalised Development Costs - - 9,342 - 9,342Computer Software 20,956 - 3,711 - 24,667Patents, Licences, Copyright,Brand Names, TrademarksTOTAL INTANGIBLEASSETS- - 5,986 - 5,98620,956 - 19,039 - 39,995The National Prosecuting Authority has Intangible Capital minor assets amounting to R 613 (2007: R 563)28.2 ADDITIONS TO INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2008Cash Non-Cash (Developmentwork in progress– currentcosts)CostFair ValueCostReceived currentyear not paid (Paidcurrent year receivedprior year)CostTotalCostR’000 R’000 R’000 R’000 R’000Capitalised Development Costs - 9,342 - - 9,342Computer Software 3,711 - - - 3,711Patents, Licences, Copyright,Brand Names, Trademarks- 5,986 - - 5,986Total 3,711 15,328 - - 19,03928.3 MOVEMENT IN INTANGIBLE CAPITAL ASSETS PER ASSET REGISTER FOR THE YEAR ENDED 31 MARCH 2007Opening balance Additions Disposals Closing balanceR’000 R’000 R’000 R’000Computer Software 6,414 14,542 - 20,956Total 6,414 14,542 - 20,956104

Annexures to the Annual Financial Statementsfor the Year Ended 31 March 2008ANNEXURE 1ASTATEMENT OF CONDITIONAL GRANTS PAID TO PROVINCESNAME OF PROVINCE/GRANT GRANT ALLOCATION TRANSFER SPENT 2006/07DivisionofRevenueActRollOversAdjustmentsTotalAvailableActualTransfer% ofAvailablefundsTransferredAmountreceivedbydepartmentAmount % ofspent by availabledepartmentspent byfundsdepartmentDivisionofRevenueActR’000 R’000 R’000 R’000 R’000 % R’000 R’000 % R’000Regional Service Council Levies - - - - - - - - - 1,096Total - - - - - - - - - 1,096105

Annexures to the Annual Financial Statementsfor the Year Ended 31 March 2008ANNEXURE 1BSTATEMENT OF TRANSFERS / SUBSIDIES TO HOUSEHOLDSHOUSEHOLDS TRANSFER ALLOCATION EXPENDITURE 2006/07RollOversTotalAvailableActualTransferAdjustedAppropriationActAdjustments% ofAvailablefundsTransferredFinalAppropriationActR’000 R’000 R’000 R’000 R’000 % R’000TransfersSocial Benefits - - - - 3,268 - 2,272Total - - - - 3,268 - 2,272106

Annexures to the Annual Financial Statementsfor the Year Ended 31 March 2008ANNEXURE 1CSTATEMENT OF GIFTS, DONATIONS AND SPONSORSHIPS RECEIVEDNAME OF ORGANISATIONReceived in CashVarious SponsorsNATURE OF GIFT, DONATION OR SPON-SORSHIPDPP-JHB (Golf Day)2007/08 2006/07R’000 R’000- 133SUB-TOTAL - 133Received in KindBritish High Commission Training week - 70Drakes & Packwells Luggage Group Soccer bags 2 -G8 Lyon Group Airfare, Accommodation and Meals - 10Manhattan Hotel Accommodation and Soccer tickets 2 -Price Waterhouse Coopers Sponsor function for Jnr Prosecutors 36 -SGI Consulting (Pty) Ltd Soccer jerseys 6 -Troika Trust Donations for team building 5 -UN Office on Drugs & Crime Travel, Subsistence & Accommodation - 10US Department of Treasury Training: Anti-corruption 1,000 -US Embassy Godiva Chocolates - 1USAID Training: Financial investigation 603 -Vodacom Caps and T-shirts - 2SUB TOTAL 1,654 93TOTAL 1,654 226107

Annexures to the Annual Financial Statementsfor the Year Ended 31 March 2008ANNEXURE 1DSTATEMENT OF LOCAL AND FOREIGN AID ASSISTANCE RECEIVEDNAME OFDONORPURPOSEOPENINGBALANCEREVENUE EXPENDI-TUREADJUSTMENTCLOSINGBALANCER’000 R’000 R’000 R’000 R’000Received incashBACEuropeanUnionFoundationfor HumanRightsPayment for JR Hillhouse to collaborateand coordinate in preparation ofcases for prosecutionAssistance to SA Government to preventand react to human trafficking.Implementation of recommendationsof the TRC regarding missing persons6 - - (6) -- 2,261 (153) - 2,108(770) - - 161 (609)Greece Thuthuzela 328 - - (328) -Royal DanishCommissionNdabezitha Project 538 552 (1,048) - 42UNICEF SOCA CCTV’s 190 - (3) (187) -USAID Prosecution of Child Sex Offenders 293 - - (293) -Vodacom Thuthuzela C.C. (34) - - 34 -WK Kellog Thuthuzela Training 905 - - (905) -Woolworths Child Courts 137 - - (137) -Total 1,593 2,813 (1,204) (1,661) 1,541108

Annexures to the Annual Financial Statementsfor the Year Ended 31 March 2008ANNEXURE 2ASTATEMENT OF FINANCIAL GUARANTEES ISSUED AS AT 31 MARCH 2008 – LOCALGuarantor institutionGuarantee inrespect ofOriginalguaranteedcapitalamountOpeningbalance1 April2007Guaranteesdrawdownsduring theyearGuaranteesrepayments/cancelled/reduced/releasedduring theyearClosingbalance31 March2008CurrencyrevaluationsGuaranteedinterestoutstandingfor yearended 31March2008Realisedlosses notrecoverable(i.e. paidout)R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000Stannic Motor Vehicles - 459 - 303 - 156 - -Sub-Total - 459 - 303 - 156 - -ABSA Housing - 2,208 74 60 - 2,222 - -BOE Bank LimitedHousing - - 13 - - 13 - -First NationalBankHousing - 200 - 39 - 161 - -First Rand Bank Housing - 660 16 - - 676 - -Free State DevelopmentCorp.Housing - 36 - 36 - - - -Nedbank Housing - 666 26 315 - 377 - -Nedbank LimitedIncorporatedNP DevelopmentCorporationOld Mutual FinanceLimitedPeople’s BankLimitedHousing - 279 - 14 - 265 - -Housing - - 44 - - 44 - -Housing - 200 111 16 - 295 - -Housing - 26 - - - 26 - -Standard Bank Housing - 1,440 46 903 - 583 - -VBS Mutual Bank Housing - 81 - - - 81 - -Sub-Total - 5,796 330 1,383 - 4,743 - -Total - 6,255 330 1,686 - 4,899 - -The opening balance of the Financial Guarantees issued has been restated as per PERSAL report (7.11.15 – State Guarantee liability).109

Annexures to the Annual Financial Statementsfor the Year Ended 31 March 2008ANNEXURE 2BSTATEMENT OF CONTINGENT LIABILITIES AS AT 31 MARCH 2008Nature of Liability OpeningBalance01/04/2007Claims against thedepartmentLiabilities incurredduring theyearLiabilities paid/cancelled/reducedduring theyearLiabilities recoverable(Providedetails hereunder)ClosingBalance31/03/2008R’000 R’000 R’000 R’000 R’000Fleet Management 80,000 - - - 80,000DSO Litigation cases 1,000 - - - 1,000Outstanding Lawsuits (NPS,AFU, WPU and PCLU)Occupational SpecificCompensation (OSD)244,781 129,550 - - 374,331- 83,951 - - 83,951Total 325,781 213,501 - - 539,282110

Annexures to the Annual Financial Statementsfor the Year Ended 31 March 2008ANNEXURE 3INTER-GOVERNMENTAL RECEIVABLES AS AT 31 MARCH 2008DepartmentGovernment Entity Confirmed balance Unconfirmed balance Total31/03/2008 31/03/2007 31/03/2008 31/03/2007 31/03/2008 31/03/2007R’000 R’000 R’000 R’000 R’000 R’000Business Against Crime (BAC) - - 618 674 618 674Department of Art and Culture - - - 20 - 20Department of Community SafetyGauteng8 - - - 8 -Department of Correctional Services - - - 24 - 24Department of Defence - - 13 - 13 -Department of Education 11 - - 11 11 11Department of Environmental Affairs - - - 15 - 15Department of Health - 8 - 84 - 92Department of Health PTMF - - 5 - 5 -Department of Home Affairs - - - 6 - 6Department of Housing - - - 7 - 7Department of Justice and ConstitutionalDevelopment27,309 3,023 760 82 28,069 3,105Department of Public Works - 4 12 10 12 14Department of Trade and Industry - - - 7 - 7Department of Transport - - 22 36 22 36Department of Water Affairs - - - 13 - 13Free State Province - - - 12 - 12Gauteng Department of Health 10 - - - 10 -Gauteng Department of Sport, Art,Culture & Rec- - 14 - 14 -Gauteng Shared Service Centre - - - 79 - 79Gauteng Social development - - 7 - 7 -Independent Complaints Directorate - - 61 14 61 14North West Province - - 1 17 1 17Office of the Public Protector - - 3 - 3 -Other - - 4 15 4 15SA Secret Services - - - 25 - 25TOTAL 27,338 3,035 1,520 1,151 28,858 4,186111

Annexures to the Annual Financial Statementsfor the Year Ended 31 March 2008ANNEXURE 4INTER-GOVERNMENTAL PAYABLES AS AT 31 MARCH 2008Government Entity Confirmed balance Unconfirmed balance Total31/03/2008 31/03/2007 31/03/2008 31/03/2007 31/03/2008 31/03/2007R’000 R’000 R’000 R’000 R’000 R’000DepartmentCurrentDepartment of Minerals and Energy 1 - - - 1 -Department of Economic Developmentand Tourism1 - - - 1 -Department of Education - - - 6 - 6Department of Health 20 - - 20 20 20Department of Justice and ConstitutionalDevelopmentGauteng Provincial Government MotorTransport- - - 24 - 24- 1,843 - 5 - 1,848National Treasury 13 - - - 13 -Safety and Security 166 35 103 11 269 46Total 201 1,878 103 66 304 1,944112

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