BOXING TECHNICAL ASSISTANT NOMSA MDHLULI FINANCIAL CONTROLLER TUMELO KEKANA ASSISTANT FINANCIAL OFFICER THABO NALA IT SPECIALIST SKHUMBUZO MOTHA RECEPTIONIST VERQUELENE JACOBS GENERAL ADMINISTRATIVE ASSISTANT MAJORIE THEBE ADMIN OFFICE ASSISTANT ABRAM KAMBULE PA TO THE CEO GUGU RADEBE DIRECTOR: OPERATIONS LOYISO MTYA CFO (VACANT) DIRECTOR: COMMUNICATION & MARKETING (VACANT) DEPUTY MINISTER OF SPORT AN RECREATION HON. GERT OOSTHUIZEN BOXING SA ORGANOGRAM CEO BONGANI KHUMALO BSA BOARD MINISTER OF SPORT AND RECREATION SA REV. DR MAKHENKESI STOFILE PROJECT MANAGER VUVU MALLIE FINANCE & ADMIN OFFICER HENRY MOTSEPE
There has been a number of resignations; (a) Mr. Bongani Khumalo resigned as the CEO on 6 May 2009, (b) Mr. Thabo Nala resigned as Financial Officer on 30 April 2009, and (c) Mrs. Gugu Radebe also resigned as Admin Manager on 25 September 2009.
After B. Khumalo’s resignation the BSA Board appointed Mr. L Mtya as the Acting CEO.
He therefore filled the position left vacant by the resignation of Mr. T. Nala, by way of recruiting Talifhani Khubana as well as appointing him in the interim to take up admin duties left vacant by the later resignation of Mrs. Gugu Radebe.
The combination of these two positions under one office was aimed at cutting the costs of employing new staff during this difficult financial period, as well as taking advantage of the financial & admin skills he brought along with him.
Recruitment: BSA will not be embarking on recruiting new staff members. However, there is an agreement between BSA and SRSA that SRSA would second the CFO, but it has recently come to the light SRSA will second an independent Financial Management & Administration team to assist BSA as a turn around strategy.
We view this as a step by government towards laying down the foundation of injecting more funds into BSA.
Successful annual Boxing Awards were held in Carnival City on February 2009
BSA managed to stage 107 tournaments in total, of which 30 were international (Statistics provided below).
Baby champs project’s fourth year was a success story.
Theta Skills development project is still on going.
There has been increased participation in international events by boxers and ring officials
Sixteen girls representing all racial groups in the country were adjudicated good enough to turn professional, and two of them (Unathi Myekeni & Noni Tenge) won International Titles i.e. WBF Junior feather weight and Welterweight title respectively.
Statistics Of Boxing Tournaments From 1 April 2008 To 31 March 2009
The 2008/09 Annual Financial Statement was submitted on time to both Auditor General and National Treasury.
The Qualified Audit Report issued by the Auditor General of South Africa was based on operating expenditure amounting to R346 239.00 without supporting documentations, as well as the following emphasis of matters:
“ Quarterly reports to the executive authority were not submitted within 30 days of the end of each quarter as required by Treasury Regulation 26.1.1.”
In the current financial year (2009/10) the last two quarterly reports were submitted in time.
Our accounting books are up to date.
The next quarterly reports will also be submitted timely.
Non-compliance with applicable legislation Public Finance Management Act
“ A framework of acceptable levels of materiality and significance, which must be agreed between the accounting authority and the executive authority, could not be provided as required by Treasury Regulation 28.3.1.”
BSA is in the process of reviewing its policies, therefore the above matter will be addressed accordingly with the consultation of all stakeholders for advice.
Non-compliance with applicable legislation Governance Framework
“ The governance principles that impact the auditor’s opinion on the financial statements are related to the responsibilities and practices exercised by the accounting authority and executive management and are reflected in the internal control deficiencies and key governance responsibilities addressed below:
Internal control deficiencies
Section 51(1)(a)(i) of the PFMA states that the accounting authority must ensure that the public entity has and maintains effective, efficient and control.
Boxing South Africa did not conduct a risk assessment and a risk management strategy was not implemented which resulted in deficiencies in other key governance requirements as indicated in the table above.”
Non-compliance with applicable legislation Governance Framework
There root cause: Control Activity.
After prior year audit the finance department has ensured that queries raised by AGSA are being addressed.
In order to enhance the mitigation of the aforesaid internal controls deficiencies BSA has engaged Mazars Internal Auditors to assist in performance of the internal controls and risk assessment.
The planned secondment by SRSA, of the Financial Management team which will inter alia assist with: (a) Corporate governance, and (b) Review of strategic plan, budget, business plan and other relevant documents, is welcomed as it will go a long way towards easing up BSA’s historic financial plight .
It must also be noted that BSA staff will utilise the funds from the National Lottery Fund to embark on a training programme in January 2010 which will enhance the quality of their work with regards to financial reporting.
“ In the current year the entity has incurred a net deficit of R4 327 497 (2008: R1 787 470) and the total liabilities exceed its total assets by
R5 951 045 (2008: R1 623 548). Boxing SA receives financial support in the form of a grant from Sports and Recreation South Africa. During the current year the entity’s operating expenses exceeded the grant received, which may indicate that the entity’s current business model is not sustainable on an ongoing basis. Additional funds will need to be secured in order for the entity to continue as a going concern.”
The last sentence in the AG’s going concern report attests to the fact that BSA needs more funds if it is to deliver on its mandate. In order to address this financial crisis more funds will have to be secured either from sponsorship or increased government grant.
It must, however, be noted that Sponsors are reluctant to assist BSA at this moment due to this accumulating deficit and media misconception.
It’s in the light of these aforesaid conditions that increased intervention by government is needed in order to sustain BSA.
BASIS OF AUDIT OPINION AUDIT FINDING CONTEXT ACTION PLAN RESPONSIBILITY Operating Expenditure: BSA could not provide sufficient appropriate audit evidence for operating expenditure amounting to R346 239. (Qualification) The trail for payments could only be traced by invoices based on quotations instead of Invoices or receipts based on actual payments Plan: The filing system has improved drastically and by March 2010 all documents will be in place BSA
EMPHASIS OF MATTER AUDIT FINDING CONTEXT ACTION PLAN RESPONSIBILITY Going Concern: BSA incurred a net loss of R4 327 497 during the year under review. The liabilities of the entity exceeded R5 951 045. (Emphasis of matter) Liabilities exceed Assets as a result of accumulating loss from prior years. While there were debts from prior years, obligations still existed that meant that services for the daily running had to be kept on course. Plan: BSA has applied for increase of grant by Government and is also working hard on securing sponsorships as there are services that, if left unattended, would lead to the total collapse of boxing. BSA and SRSA Fruitless and wasteful expenditure of up to R1 313 226 was incurred. This relates to dismissals, vat and PAYE including interests and penalties incurred. (Emphasis of matter) Expenditure which could have been avoided Plan: BSA has made arrangements with SARS regarding the terms and conditions of repayments of vat, PAYE, interest and penalties and BSA still awaits correspondence from SARSA BSA
OTHER MATTERS AUDIT FINDING CONTEXT ACTION PLAN RESPONSIBILITY Quarterly Reports to the Executive Authority not submitted within 30 days at the end of each quarter in line with the PFMA and the Treasury Regulations. (Other matter). Non Compliance to PFMA and Treasury Regulation Plan: BSA has re-programmed its timetable for services in order to submit statutory document on time. Copy from presentation submitted on time. BSA The Budget and the Strategic Plan were not submitted to the Executive Authority as required by the PFMA and the Treasury Regulations. (Other matter). Non Compliance to PFMA and Treasury Regulation Plan: BSA Board and CEO (Acting CEO) to engage SRSA -SRSA has conducted a workshop to address Strategic Planning. The Board will further engage SRSA in this regards. BSA Board and The Acting CEO BSA budgeted for a deficit without obtaining prior written approval from the National Treasury as prescribed by the PFMA. Non Compliance to PFMA and Treasury Regulation BSA will engage National Treasury and SRSA regarding the budgeting process. BSA will have to use a zero base budget method in future BSA
OTHER MATTERS AUDIT FINDING CONTEXT ACTION PLAN RESPONSIBILITY Levels of materiality and significance could not be provided as required by the Treasury Regulations. Non Compliance to PFMA and Treasury Regulation Plan: (1) Engage Auditor General and National Treasury. (2)Financial policies will be reviewed on yearly basis. (3) BSA is in the process of reviewing policies and Internal Auditors recommendations will be considered. BSA and Board Internal control deficiencies: Control activities and monitoring. Weak Internal controls due to CFO position being vacant BSA has an Internal Auditing team while also being informed that a Financial Management team will be appointed by SRSA to assist in this regard. BSA The financial statements were subject to material amendments resulting from the audit. BSA statements were prepared in/on GAAP basis which led to the said amendments. Plan: BSA Financial Statements will be prepared on GAAP basis BSA
OTHER MATTERS AUDIT FINDING CONTEXT ACTION PLAN RESPONSIBILITY The Audit Committee did not substantially fulfill its responsibilities as set out in the PFMA and the Treasury Regulations. . Non Compliance to PFMA and Treasury Regulation Plan: To engage internal Auditors and enable the Audit Committee to fulfill its responsibilities. BSA has engaged the services of Mazars Internal Audit Audit Committee The public entity did not have an internal audit function in operation throughout the financial year. . Non-compliance with regulatory requirements. Plan: Engagement of Internal Audit BSA has engaged Mazars Internal Auditors BSA There are significant deficiencies in the design and implementation of internal control in respect of financial and risk management. Non-compliance with regulatory requirements. Plan: Engagement of Internal Audit BSA has engaged Mazars Internal Auditors BSA
OTHER MATTERS AUDIT FINDING CONTEXT ACTION PLAN RESPONSIBILITY No periodic risk assessments were performed, no risk management strategy (including a fraud prevention plan), is documented and used as set out in the Treasury Regulations. Non-compliance with regulatory requirements. Plan: Engagement of IA and review of fraud prevention plan and policy BSA The previous year’s audit findings have not been substantially addressed. Previous year queries were not addressed in full. Plan: There has been more MANCO Meeting from the beginning of this Financial year in order to address the Audit. BSA
BSA has not yet received grant from SRSA for quarter ending June and September 2009.
National Lottery Fund sponsorship, which BSA has not received for two years has been recovered. The amount R659 000.00 which was acquired will be used exclusively for training and development.
The remaining income is derived from sanctioning & licensing fees.
In an attempt to cut to cut costs, BSA decided to in future; (1)the designing & printing of annual reports will be done in house, (2) replace resigned staff with staff already in BSA service instead of recruiting new staff from outside. (3) negotiate ownership over the assets that are being leased, and (4) determine other expenses that can be done away with.
Article dated October 2009 “ The Star article titled Boxing SA lifts executive’s salary 45% despite its insolvency”
“ Current board members received a combine R117 000 for their duties to Boxing SA. Former board chairman Dali Mpofu, who was paid R11 000 in 2008, received a further R6 700 in this past financial year, while current chairman Peter Ngatane was paid R21 000, up from the R10 000 he received in 2008.”
The BSA board members are non paid private persons who do the job of boxing activities on a voluntary basis. They are neither paid by SRSA nor BSA, but are however, paid emoluments based on the meetings they attend and the hours thereof.
There has been reports that while BSA has been in financial crisis board members went on to pay themselves emoluments amounting to R117 000.
With an exception of Adv Dali Mpofu who is no longer a member of BSA, the amounts mentioned have not been paid to the board members accrue from the period of time they have been engaged and are still them. This is due to the financial crisis and will be paid to them when BSA recovers.
BSA is set to consider the tax implications of this situation as the members may still be taxed according to law even though they have not yet received the money.
“ .... chief executive Bongani Khumalo’s salary rose from R624 000 in 2008 to more than R1 ,million in the past financial year.”
Mr Khumalo was appointed on January 2007, but only commenced his duties in June 2007 due to ill health. This means for the first six months of his contract he did not work. The quoted amount of over a million is therefore the sum total of his annual salary, backpay, leave pay as well as his medical expenses which were recovered form his monthly salary.
With five months to go, BSA is in an all systems go state for 2009/10 Financial year audit, the current work force has a passion, determination and a drive to go where there is no path so that they leave the trail.
"Failure is simply the opportunity to begin again, this time more intelligently." -Henry Ford.