Twenty-Fourth Report of the Standing Committee on Public Accounts,
dated 4 August 2003:
The Standing Committee on Public Accounts, having considered the General
Reports of the Auditor-General on Audit Outcomes AND audit Activities for the year ended 31 March 2002, [RP 226/2002] and [RP 211/2002] respectively, as well as the Annual Report of the Office of the Auditor-General [RP 221/2002], reports as follows:
Introduction At a hearing held by the Committee on 26 March 2003 the Auditor-General made a presentation on the General Report, and evidence was also heard from various other persons, including the Director General: National Treasury, and the Director-General: Public Service and Administration. The Committee expresses its appreciation for their assistance in clarifying aspects of the Report and related matters.
The two present Reports under review follows on the General Reports on audit outcomes and audit activities for the previous two financial years, and as such is a continuation of the Auditor-General's improved overall transversal reporting to Parliament on the financial management by the national government and provincial governments. Unlike in previous years, the audit outcomes for Local Government have not been included. Those outcomes will be dealt with in a separate General Report.
The Committee, in its Report on the previous General Report of the Auditor-General on audit outcomes, suggested that the General Report should be submitted at an earlier date. The Committee welcomes the fact that the present General Report was tabled significantly earlier than in previous years, thus allowing the Committee and other interested parties to take cognisance of the information while it is still relatively current.
B. Value of the General Report The Report is a valuable tool to assist Parliament in the exercise of its oversight functions in terms of the Constitution. It provides a framework from which Parliament can assess and compare at a holistic level the financial management and corporate governance of state departments, provinces, and public entities.
However, it should be emphasised that the Report is based mainly on the audit reports of the respective auditees; it does not purport to be a comprehensive account and comparison of the performance of the entities concerned. Audit opinions are expressed only on the financial statements of auditees, not on compliance with legislation other than that dealing with financial matters.
Furthermore, an audit report does not necessarily reflect all concerns about the financial management of the auditee. For example, an entity could get a "clean" report (i.e an unqualified audit opinion is expressed) despite deficiencies in its financial management, as long as its financial statements in the opinion of the auditor present fairly the state of its affairs. In this regard the Committee wants to caution departments against a false sense of comfort based merely on the receipt of an unqualified audit report. Despite such a report there could be issues of concern relating to financial management that require the attention of both the department and this Committee, especially where those issues have been identified by the Auditor-General under "emphasis of matter".
Some Members of the Committee expressed concern that the incomplete manner in which some information is presented in the Report could create the wrong impression about the comparative performance of the entities in question. For example, the lists showing the occurrence of thefts, losses and irregularities, and unauthorised expenditure do not include all the entities that according to their financial statements experienced such events. The Committee therefore appreciates the undertaking by the Auditor-General to try to present future information in a better way to prevent misunderstanding. Even though matters such as unauthorised expenditure might be properly disclosed in the relevant financial statements, the Committee recommends that where appropriate they should also be reflected in the General Report of the Auditor General.
The Committee noted the areas that the Auditor-General indicated he would be focusing on in the next year, such as corporate governance, fraud prevention, salary costs and performance information, and follow-up of SCOPA resolutions. The Committee also welcomes his invitation to SCOPA to forward to him any proposals it may have in this regard.
C. Trends One of the main objectives of the General Report is to provide an overview of the overall trends and developments in audit findings from year to year. To give the full picture, the Report should cover all state departments, and it is disappointing that this is not happening due to some departments not having submitting their financial statements in time. The objective of the General Report is frustrated to a degree if it is not all-inclusive, since this tends to give a distorted view of the developing trends. The Committee will therefore pursue its endeavors to ensure that departments and entities whose annual reports are tabled after the statutorily required date, be called to account.
An analysis of the present Report shows encouraging improvements in certain respects. For example the type of qualifications and emphasis of matters previously recorded in audit reports have largely been eliminated. This includes non-compliance with certain provisions of the Public Finance Management Act, 1999. The Committee agrees with the conclusion in the Report that this indicates that the responsiveness to audit reports and the implementation of the Public Finance Management Act are showing an improvement in the underlying financial stewardship of public funds by government departments and their related entities.
However, a pattern of recurring problems is seemingly starting to emerge with certain departments, notabl y the departments of Home Affairs, Justice and Constitutional Development, Public Works, and Water Affairs and Forestry. Each of these departments received qualified audit opinions in both the 2000-2001 and the 2001-2002 financial years. The Committee noted the explanation by the Director-General of the National Treasury that these departments are complex organisations; therefore it might be unfair simply to stereotype them for their poor performance in this regard. Nevertheless, the Committee expresses its concern about this state of affairs.
D. Internal control The Report reveals an increase in the number of issues relating to the lack of proper internal control over accounting and financial systems and processes. This includes matters such as asset management and procurement, and employment and related costs. It would seem that several departments do not have adequate internal control policies and procedures. In almost fifty percent of provincial departments and almost forty percent of national departments, the auditors could not rely on the internal controls.
Internal control is a fundamental feature of financial management. It is critical to the overall control of the organisation and, ultimately, the quality of delivery of services and performance of functions. The Committee shares the view of the Auditor-General that where institutions cannot provide adequate internal control measures to support their organisation, this presents a fundamental obstacle to overall effectiveness. Accordingly, the Committee recommends that departments that have been identified as lacking in internal control capacity should as soon as possible take steps to rectify the matter. Progress in this regard should be reflected in the relevant audit reports as well as the annual reports of the departments concerned.
It would seem that some of the internal control problems are due to problems with the transversal Computerised system such as the Personnel System (PERSAL) and the Basic Accounting System (BAS) and the older Financial Management System (FMS), as well as general control problems at the State Information Technology Agency (SITA). The Committee supports the Auditor-General in calling for urgent attention to resolve these matters, as it could also hamper the effective introduction of accrual accounting.
E. Internal auditing According to the Auditor-General's assessment, a significant number of auditees failed to comply with the internal audit requirements of the Public Finance Management Act. Some had internal audit functions that were not functioning properly, as was evidenced by the fact that only thirty percent of auditors of national departments placed reliance on the work of the internal audits, although it was not clear in how many of these cases non-reliance was due to a difference in audit coverage, or whether the internal audit functions was actually ineffective or both.
Internal audit functions have a vital role in the assessment of risks and the effectiveness of the internal control system, including performance audits and value for money auditing and reporting. The Committee urges the accounting officers concerned to take corrective steps without delay to ensure that there are properly functioning internal audit sections and audit committees in place.
F. Public entities The Committee noted with concern that the difficulties referred to in the previous General Report regarding the mandate of the Auditor-General in relation to certain public entities have not yet been resolved. This is a serious matter because, in the end, it could jeopardise parliamentary oversight of those entities.
Since it would not seem possible to obtain clarity on the legal position due to incongruities in the various pieces of legislation, the Committee is interested in the manner in which the Public Audit Bill, recently tabled in Parliament, clarifies the position and how it brings the situation into line with section 188 of the Constitution.
A matter of particular concern relating to the fifteen public entities dealt with in the General Report is that only six of them tabled their annual reports in Parliament within the prescribed time. It should be reiterated that reporting to Parliament in time is essential for effective accountability and parliamentary oversight.
G. General Other issues raised by the Committee with the Auditor-General, the Director-General of the National Treasury and the Director-General of Public Service and Administration include the following:
The classification or categorising of provinces, state departments, accounting officers and chief financial officers according to their proven performance with respect to financial management.
The question of the under-spending of budgets and the concomitant occurrence of "fiscal dumping".
The manner in which the Auditor-General conducts audits, and the steps in the audit process, including performance auditing and interaction between the auditors and the auditees.
The handling of cases of financial misconduct.
The submission of annual financial consolidated statements in terms of section 8 of the Public Finance Management Act.
The remuneration of senior public service employees and public entities.
A framework for Parliament's financial management oversight.
Part II of the General Report gives a comprehensive overview of the audit outcomes in the respective ministerial portfolios of the national government. These portfolio summaries provide very useful reference material, not only for Parliament, but also for the Ministers and departments concerned. The Committee will deal with the detail of the audit outcomes when it considers the reports of the respective entities.
H. Capability model The Committee has noted with interest the new Financial Management Capability Model that the Auditor-General will be using in future. The object of this model is to provide a framework to enable the reader of the General Report to assess the adequacy of financial management, to monitor progress and to make comparisons.
The Committee expresses the hope that this capability model will facilitate and enhance the use of General Reports, and recommends that in developing this model, the Auditor-General should involve the relevant stakeholders
Conclusion
The Committee is disturbed by the recent tendency of some Accounting Officers in disputing the audit findings of the Auditor-General when appearing before the Committee. The Committee is aware that Departments are afforded sufficient formal opportunity during the audit process to raise their concerns with the Auditor-General before the report is tabled in Parliament. This has the concurrence of the Directors-General of the National Treasury and the Department of Public Service and Administration. The Committee finds this practice unacceptable, as it tends to undermine the work of the Auditor-General.
The personnel capacity in the public service, including the retention of staff and the filling of vacancies, particularly vacancies in critical financial management positions remains a matter of concern. The Committee welcomes the comments made by the Director-General of the Public Service and Administration that the moratorium on filling of vacant post does not apply to management posts, and that in the case of critical posts, departments are allowed to file an application with the DPSA to fill these posts. He indicated that the DPSA has never turned down any application in this regard. The Committee therefore, urges Directors-General to use this tool in addressing this problem. Report to be considered.
== Twenty-Fifth Report of the Standing Committee on Public Accounts, dated 4 August 2003:
1. INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the external auditors (APF Chartered Accountant Incorporated) on the Financial Statements of ALEXKOR Limited for the year ended 31 March 2002,reports as follows:
2. AUDIT OPINION The Committee commends the management of ALEXKOR Limited for the unqualified audit opinion expressed by the external auditors, and trusts that future audit opinions will be equally unqualified.
3. CONCLUSION Having noted the unqualified audit opinion expressed by the external auditors, it is the view of the Committee that no further action with the entity would be necessary for the financial year under review.
Report to be considered.
== Twenty-Sixth Report of the Standing Committee on Public Accounts, dated 4 August 2003:
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the external auditors (Ernest & Young and Gobodo Inc.) on the Financial Statements of the Corporation for Public Deposits for the year ended 31st March 2002, tabled in Parliament on 23 August 2002 and referred to it, reports as follows:
2. AUDIT OPINION The Committee commends the Board for the unqualified audit opinion expressed by the Auditors, and trust that future opinions shall be equally unqualified.
3. CONCLUSION Having considered the Annual report, and noted the unqualified audit opinion, it is the view of the committee that no further action with the entity would be necessary for the financial year under review.
Report to be considered.
== Twenty-Seventh Report of the Standing Committee on Public Accounts, dated 4 August 2003:
1. INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor General on the Financial Statements of the Primary Agriculture Education and Training Authority for the year ended 31 March 2002, tabled in Parliament on 28 August 2002 and referred to it, reports as follows:
2. TABLING OF ANNUAL REPORT The Committee commends the Board of the Primary Agriculture Education and Training Authority for having timeously tabled its Annual Report, thereby complying with the relevant section of the Public Finance Management Act
3. AUDIT OPINION The Committee commends the management of PAETA for the unqualified audit opinion expressed by the Auditor General, and trusts that future audit opinions will be equally unqualified
4. CONCLUSION Having considered the Annual report, and noted the unqualified audit opinion, it is the view of the Committee that no further action with the entity would be necessary for the financial year under review.
Report to be considered.
== Twenty-Eighth Report of the Standing Committee on Public Accounts, dated 4 August 2003:
1. INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor General on the Financial Statements of Health Welfare Sector Education and Training Authority SETA for the year ended 31 March 2002, tabled in Parliament on 13 October 2002 and referred to it, reports as follows:
2. TABLING OF ANNUAL REPORT The Committee notes that Health Welfare Sector Education and Training Authority SETA (HWSETA) had not tabled its report timeously, thereby contravening the relevant Section of the Public Finance Management Act.
The Committee urges the management of Health Welfare Sector Education and Training Authority SETA to ensure compliance of the relevant Section of the PFMA
3. AUDIT OPINION The Committee notes the qualified audit opinion expressed by the Auditor General with concern. SCOPA trusts that Management will pay the necessary attention to those issues, which resulted in a qualified opinion, so that future audit opinions will be unqualified.
4. EMPLOYERS GRANTS LIABILITY The Committee notes that an amount of R64, 922,740 has been disclosed as a liability, but that this amount could not be substantiated by actual claims lodged by employers at year-end. The Committee is concerned that the unutilised surplus for the year could therefore be substantially understated and the actual Performance of this SETA is not visible. Such incorrect disclosure to Parliament hampers effective oversight, and is unacceptable. Further, HWSETA did not create a contingent liability regarding future potential claims by employers as required by generally accepted accounting practice.
The Committee recommends that the Board of HWSETA take immediate and effective steps to ensure proper disclosure in respect of the financial statements for the year end 2002-2003, and that the Auditor-General report thereon in his next report. Further, the Committee recommends that Auditor-General of employers’ grant liabilities of all SETAs in respect of the 2002-2003 financial year where the disclosure is not according the specimen financial statements.
5. CONCLUSION In spite of the above concerns, the Committee does not consider it necessary at this stage to have a hearing on these matters and will await the AG’s next report.
Report to be considered.
== Twenty-Ninth Report of the Standing Committee on Public Accounts, dated 4 August 2003:
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on Competition Tribunal (Report No. RP201/2002), reports as follows:
AUDIT OPINION The Committee notes the unqualified opinion expressed by the Auditor General and commends management thereon.
The Committee also noted the issues raised under emphasis of matters. The Committee expects the accounting officer to expeditiously rectify all the issues in question.
The Committee will await the Auditor General 's Report on the follow-up audit work in this regard.
CONCLUSION Having considered the Annual report, and noted unqualified audit opinion, it is the view of the Committee that no further action with the entity would be necessary for the financial year under review.
Report to be considered.
== Thirtieth Report of the Standing Committee on Public Accounts, dated 4 August 2003:
INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor General on the Financial Statements on Vote 23: the Department of Safety and Security for the year ended 31 March 2002 [RP 172/2002], tabled in Parliament on 20 September 2002 and referred to it; as well as having considered the evidence led at the hearing on 30 October 2002 and the response from SAPS subsequent to the hearing, reports as follows:
2.TABLING OF ANNUAL REPORT The Committee notes with disappointment that the Department’s Annual Report was tabled in Parliament on 20 September 2002; and that the late tabling constitutes non-compliance with relevant provisions of the Public Finance Management Act.
3. AUDIT OPINION The Committee commends the Department for the unqualified audit opinion expressed by the Auditor General, and trusts that future audit opinions shall be equally unqualified.
4. EMPHASIS OF MATTER While noting the unqualified audit opinion, the Committee notes that under Emphasis of Matter the Auditor General has raised various issues of concern, which needs the attention of Management, and on which the Committee makes comments and/or recommendations hereunder.
5. ADMINISTRATION OF LEAVE From the evidence presented, the Committee notes with appreciation that in 2000 there was a decline of 20% in terms of all categories of leave taken compared to 1999, and a further decline of 17% in 2002 as compared to 2001.
The Committee notes that the Department has made an analysis of the root causes of the problems.
The Committee recommends that:
as a matter of urgency, National Treasury should be approached with the view to assisting the Department in resolving the current systems problems it is experiencing with PERSAL in administering leave;
in the absence of computerised systems, controls around the manual systems should be strictly maintained to provide the integrity and reliability of captured data;
the Department should implement corrective measures to ensure that the time lapse between the time when leave is taken and when it is captured on the system, is reduced to more acceptable levels; and,
the results of the training workshops that were held by the Department should be evaluated by the Auditor General to determine whether or not the workshops had a positive impact, and specifically assess that at provincial level leave records are correctly recorded on the PERSAL system.
6. FIREARMS AND AMMUNITION The Committee commends the Department for the overall reduction in the number of cases reported in relation to the theft and loss of firearms.
The Committee however notes with concern that of the 444 firearms lost during the year under review, 219 were lost under reasons classified as "unknown". This is disturbing to the Committee as it is an indication of deficient administration regarding the recording of losses.
The Committee recommends that the Department:
ensures that the administrative aspects in relation to the recording of losses are tightened up;
provides the Committee with the details of what constitutes this "unknown" category; and,
Refrains from using this "unknown" category in future in disclosing the loss of firearms.
The Committee heard evidence to the effect that members of SAPS do not adhere to the provisions of the relevant legislation regarding the safe-keeping of firearms in lockable safes when they are off duty. The Department’s attention is directed to the relevant legislation in terms of which members must ensure that "the firearm is stored in a prescribed safe".
From the Department’s written response dated 15 May 2003, the Committee notes and welcomes the following, that:
the Department has taken steps to address the issue of insufficient safes; and
a policy document, regarding the issuing of firearms to members whilst off duty, has been circulated.
The Committee recommends that the Office of the Auditor General monitor the extent to which the Department has taken steps to ensure that members of SAPS are in a position to comply with the law.
DEFICIENT LOSS CONTROL MANAGEMENT In terms of the evidence, the Committee notes that:
a comprehensive loss control system was developed and implemented on 1 April 2001;
the Department is currently transferring all the existing loss cases onto the new system; that the Department has enlarged the capacity of the loss control environment;
approximately 30% of all these cases have been completed onto the new loss control management system; and,
although promises were made that the total system would be in place by March 2002, the new target date is anticipated to be March 2003.
The Committee recommends that by 30 September 2003
the Department furnishes the Auditor General with a full account and details of losses to the State;
the Department provides the Committee with information as to when the backlog of long outstanding cases which pose a risk of being prescribed will be finalised; and,
the Auditor General evaluate the extent to which the newly-implemented loss management system has been effective in disposing of the backlog of outstanding cases.
FUEL AND OIL In terms of the evidence, the Committee notes that capturing of data in relation to the receipt and issuing of fuel and oil increased on average from 40% in 2000/2001, to 60% in 2001/2002, and to 87% up to October 2002.
This reflects a dramatic improvement, and the Committee commends the Department for it.
However, according to the Auditor General, force numbers were not always entered on speed point slips; that control over speed point slips was lacking; that vehicle registers were not checked regularly; and that logbook entries were incomplete.
The Committee welcomes the establishment of a special team, which is going to all the Provinces advising members about these issues.
The Committee recommends that Parliamentbe furnished with a report by 30 September 2003, indicating the progress made in relation to the other shortcomings.
FREE SERVICES It is evident from the hearing that there is confusion regarding the definition and interpretation of the concept "free services"; and that the responses to the questions posed were unsatisfactory, since they were related to the provision of free services to its members in the form of messes and canteens.
The Committee therefore recommends that the Department interacts with the Auditor General and if necessary also with National Treasury to clarify the confusion regarding the definition and interpretation of free services.
The Committee further recommends that by 30 September 2003, the Department provide Parliament with a progress report indicating whether or not the matter has been resolved.
MEMBERS ON SUSPENSION The Committee notes that at 31 March 2000, the number of suspended members on full pay and benefits stood at 604 at a total cost of over R30m to the state. The number of suspended members was subsequently reduced to 153 as at 31 May 2001.
The Committee commends the department for the dramatic improvement in reducing the number of members on suspension.
The Committee welcomes the appointment of Presiding Officers and Disciplinary Officers, thus creating capacity to address the issue of outstanding cases of suspension.
The Committee recommends that by 30 September 2003, the Department furnishes Parliament with the total figure of members on suspension with full pay and benefits as at 31 March 2003, and the total cost thereof to the State.
APPOINTMENTS, PROMOTIONS AND PERSONNEL INFORMATION The Committee notes that before making a finding that is in the Audit Report, the Auditor General and department is involved in continuous consultation under the auspices of a joint and Audit Steering Committee, that includes a Management Letter to the Department outlining any deficiencies, which the Department needs to address.
On the basis of this process, the Committee expects that the issue of the unavailability of records relating to appointments, promotions and personnel information can be easily resolved between the Department and the Office of the Auditor General before the inclusion of the matter in the Audit Report.
MANAGEMENT OF DEBTORS AND ADVANCES The Committee commends the Department for having achieved a 62% decrease in its advances in respect of travel and subsistence expenditure, and for having decreased the percentage of accounts receivable older than 36 months from 26,4% in March 2001 to 8,6% in January 2002.
The Committee nevertheless remains concerned at the inadequate debtor management, especially in relation to the following:
Outstanding Debtors: the ageing of debtors is problematic because it is not based on the original dates when the debts were incurred, but when payments were received. Outstanding debts older than 3 years, amounted to R13, 6m. The Auditor-General is of the opinion that most of these debts will be written off.
Guarantee Scheme for Housing Loans: As at 31 March 2001, SAPS had honoured R10, 6m of which R3, 2m has been outstanding for between 2 years and 10 years.
Other Debtors amounted to R66m. According to the department itself, the recoverability of these debts appears to be doubtful in 77% of the cases.
Staff Debts stood at R34m as at 31 March 2002, of which R14, 4m was in respect of overpaid salaries.
The Committee recommends that by 30 September 2003, the Department indicate to Parliament what plans it has in mind to rectify the situation, and the time frame by when such plans would address the shortcomings.
INTERNAL AUDIT The Committee notes that:
the annual internal audit was not fully executed due to the lack of capacity, expertise and experience within the Internal Audit Function;
the Audit Committee therefore agreed with Management to co-source the internal audit function with an external professional firm of internal audit service providers; and,
the Tender Evaluation Committee has met, and the appointment of a company will be made soon.
The Committee recommends that the matter be finalised as a matter of urgency, and that the Auditor General evaluate the work of the Service provider, and report thereon in his next Audit Report.
UNAUTHORISED EXPENDITURE The Committee notes that unauthorised expenditure of R2, 84m as a result of overspending on Programmes in respect of the Police Services of Qwaqwa Government for the financial year 1994/1995 has been reported on for several years.
The matter could not be finalised because supporting documentation to substantiate the expenditure could not be obtained.
The Committee notes the Department’s suggestion that in order to finalise the matter, some sort of authorisation should be formulated.
The Committee recommends that after all avenues have been explored to obtain the relevant source documentation with regard to the amount in question, the Accounting Officer should submit to Treasury his view on the feasibility of any further action in this regard, and report to SCOPA on the responses of Treasury.
ADMINISTRATION OF STOCK The Committee notes that the Auditor General has reported on the excess stock for several years; and that excess stock amounted to R145m, which is 44% of the total value of provisioning stock at 31 March 2002.
The Committee welcomes the Department’s plan to reduce excess stock levels by a third for each of the three forthcoming financial years.
The Committee recommends that the Auditor General evaluate the extent to which these targets have been met and report thereon in his Audit Reports for the next three years.
WORKSHOP ACCOUNTING SYSTEM The Committee notes that up to now the new computerised workshop accounting system has been installed at 65 of 148 workshop sites.
The Committee is concerned that the installation of the system at the remaining sites depends on the availability of funds, and that no time frame has been set for them.
The Committee recommends that the Department ensures as a priority that the required funds are allocated for the completion of the project, and that the Department gives an indication of by when all workshop sites shall be completed.
VEHICLE MANAGEMENT AND MAINTENANCE The Committee notes with concern that internal control over vehicle management and maintenance was still lacking and that the Auditor General has cited various weaknesses and shortcomings in relation to this matter.
The Committee recommends that by 30 September 2003, the Department submits a report to Parliament indicating the Department’s strategy to address the matter, and by when will it adequately do so.
MANAGEMENT OF FIXED ASSETS The Committee notes with concern that shortcomings and weaknesses in the management of fixed assets have been a recurring problem for several years.
The Committee recommends that by 30 September 2003, the Department indicates what obstacles prevents it from addressing these shortcomings and weaknesses; how it intends overcoming the obstacles; and, by when will the Department put in place a system which will effectively address the issue.
FINANCIAL MANAGEMENT CAPACITY AND TRAINING The Committee considers effective financial management, capacity building and training in this regard, as fundamental to the effective management of the Department. This should inter alia ensure that:
an adequate number of competent financial management staff be appointed;
the control systems and control environment be continuously improved;
reliable information systems are established that produce regular and accurate management information to be is used to guide the management processes;
financial and non-financial (operational) information systems are integrated; and
improved efficiency and effectiveness in the application of the available funds be ensured.
The Committee recommends that the Department submit a report to Parliament by 30 September 2003 on the progress made in this regard.
20. NATIONAL SECRETARIAT FOR SAFETY AND SECURITY
UNAUTHORISED EXPENDITURE OUTSTANDING The Committee notes that in terms of paragraph 3.5.3 of the 2000-01-audit report of the Auditor-General, which refers to paragraph 3.5.3 of the 1999-2000-audit report (RP 138/2000), the National Secretariat for Safety and Security applied for ex post facto approval of the unauthorised expenditure of R330 126. To date this matter has not yet been finalised.
However, subsequent to the review of the supporting documentation that was provided by the National Secretariat the Committee noted that:
the supporting documentation has been provided in this regard; reasons put forward for the incurred expenditure that at face value seem adequate (namely that services/goods were rendered/received; value for money was received, and that the State had suffered no loss); and steps taken to obtain approval from the State Tender Board. Once the Committee has been informed whether the aforementioned State Tender Board approval had been obtained, the Committee will consider recommending to the National Assembly that the expenditure be approved.
The Committee recommends that the Accounting Officer finalise the correspondence with the State Tender Board as a matter of urgency and report the outcomes to Parliament by 30 September 2003.
Report to be considered.
== Thirty-First Report of the Standing Committee on Public Accounts, dated 4 August 2003:
1. INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor General on the Financial Statements of Services SETA for the year ended 31 March 2002 [RP 94/2002], tabled in Parliament on 17 September 2002 and referred to it, reports as follows:
2. TABLING OF ANNUAL REPORT The Committee noted that Services SETA had not tabled its report timeously, thereby contravening the relevant section of the Public Finance Management Act.
The Committee urges the management of Services SETA to ensure compliance with the relevant section of the PFMA
3. AUDIT OPINION The Committee commends the management of Services SETA for the unqualified audit opinion expressed by the Auditor General, and trusts that future audit opinions will be equally unqualified.
4. CONCLUSION Having considered the Annual report, and noted the unqualified audit opinion, it is the view of the Committee that no further action with the entity would be necessary for the financial year under review.
Report to be considered.
== Thirty-Second Report of the Standing Committee on Public Accounts, dated 4 August 2003:
1. INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the external auditors (Pricewaterhouse Coopers Inc) on the Financial Statements of Denel (Pty) for the year ended 31 March 2002,reports as follows:
2. AUDIT OPINION The Committee commends the management of Denel (Pty) for the unqualified audit opinion expressed by the external auditors, and trusts that future audit opinions will be equally unqualified.
3. CONCLUSION Having noted the unqualified audit opinion expressed by the external auditors, it is the view of the Committee that no further action with the entity would be necessary for the financial year under review.
Report to be considered.
== Thirty-Third Report of the Standing Committee on Public Accounts, dated 4 August 2003:
1. INTRODUCTION The Standing Committee on Public Accounts, having considered the Annual Report, including the Report of the Auditor General on the Financial Statements of the Local Government Water and Related Services SETA for the year ended 31 March 2002, tabled in Parliament on 28 August 2002 and referred to it, reports as follows:
2. TABLING OF ANNUAL REPORT The Committee commends the Board of the Local Government Water and Related Services SETA for having timeously tabled its Annual Report, thereby complying with the relevant section of the Public Finance Management Act
3. AUDIT OPINION The Committee notes the unqualified audit opinion expressed by the Auditor General and trusts that the future audit opinions will be equally unqualified.
4. EMPHASIS OF MATTER The Committee notes that the Auditor General has cited several issues under Emphasis of Matter that needs Management’s attention. The Committee comments on the issues in point 5 and 6 below.
5. INTERNAL AUDIT The Committee notes that no internal audit was conducted during the year under review.
The Committee however notes that the internal audit met for the first time on the 2 April 2002, and therefore was not in a position to conduct internal audit function.
The Committee recommends that the Auditor General report thereon in his next Report.
6. FINANCIAL STATEMENTS The Committee notes that the financial statements was submitted within the prescribed timeframe for auditing purposes, the cash flow statement, as required by generally accepted accounting practice was omitted.
The Committee recommends that the Auditor General report thereon in his next Report.
7. CONCLUSION Having considered the Annual report, and noted the unqualified audit opinion, it is the view of the Committee that no further action with the entity would be necessary for the financial year under review.
Report to be considered.
== Thirty-Fourth Report of the Standing Committee on Public Accounts, dated 4 August 2003:
INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the external auditors (Deloitte & Touché, PriceWaterHouse Coopers Inc and Nkonki Sizwe Ntsaluba Inc) on the Financial Statements of the South African Reserve Bank for the year ended 31st March 2002, tabled in Parliament on 10 September 2002 and referred to it, reports as follows:
AUDIT OPINION The Committee commends the Board and the Executive Management for the unqualified audit opinion expressed by the auditors and trust that future opinions shall be equally unqualified.
CONCLUSION Having considered the Annual report, and noted the unqualified audit opinion, it is the view of the committee that no further action with the entity would be necessary for the financial year under review.
Report to be considered.
== Thirty-Fifth Report of the Standing Committee on Public Accounts, dated 4 August 2003:
1. INTRODUCTION The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on South African National Parks, reports as follows:
2. AUDIT OPINION The Committee commends the management of South African National Parks for the unqualified audit opinion expressed by the Auditor General, and trusts that future audit opinions will be equally unqualified.
3. CONCLUSION Having considered the Annual report, and noted unqualified audit opinion, it is the view of the Committee that no further action with the entity would be necessary for the financial year under review.
Report to be considered.
== Thirty-Sixth Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Department of Public Service and Administration for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Department for the unqualified audit opinion expressed by the Auditor-General and trust that future audit opinions will be equally unqualified.
The Committee, however, put questions for clarification to the Accounting Officer on matters, which according to the Committee needed attention.
Having considered the written replies from the Department, the Committee is satisfied that the Accounting Officer is attending to the matters in question in terms of their PFMA obligations concerning financial management.
Having considered the Annual Report, the Report of the Auditor-General and the replies from the Accounting Officer, the Committee is of the view that no further interaction with the Department is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Thirty-Seventh Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on Erf 706 Rietfontein (Pty) Ltd for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of Erf 706 Rietfontein for the unqualified audit opinion expressed by the Auditor-General and trust that future audit opinions will be equally unqualified.
Having considered the Annual Report, the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Thirty-Eight Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Film and Publication Board for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Film and Publication Board for the unqualified audit opinion expressed by the Auditor-General and trust that future audit opinions will be equally unqualified.
Having considered the Annual Report, the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Thirty-ninth Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Independent Communications Authority of South Africa (ICASA) for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of ICASA for the unqualified audit opinion expressed by the Auditor-General, and trust that future audit opinions will be equally unqualified.
The Committee, however, put questions for clarification to the Chief Executive Officer on matters, which according to the Committee needed attention.
Having considered the written replies from the accounting authority, the Committee is satisfied that the Chief Executive Officer is attending to the matters in question in terms of their PFMA obligations concerning financial management.
Having considered the Annual Report, the Report of the Auditor-General and the replies from the accounting authority, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Fortieth Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Independent Auditors on the National Housing Finance Corporation Limited for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the National Housing Finance Corporation for the unqualified audit opinion expressed by the Independent Auditors and trust that future audit opinions will be equally unqualified.
Having considered the Annual Report, the Report of the Independent Auditors and noting the unqualified audit opinion expressed by the Independent Auditors, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Independent Auditors.
Report to be considered.
== Forty-first Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the National Prosecuting Authority of South Africa for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the National Prosecuting Authority for the unqualified audit opinion expressed by the Auditor-General, and trust that future audit opinions will be equally unqualified.
The Committee, however, put questions for clarification to the Chief Executive Officer on matters, which according to the Committee needed attention.
Having considered the written replies from the accounting authority, the Committee is satisfied that the Chief Executive Officer is attending to the matters in question in terms of their PFMA obligations concerning financial management.
Having considered the Annual Report, the Report of the Auditor-General and the replies from the accounting authority, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Forty-Second Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Independent Auditors on the National Urban Reconstruction and Housing Agency for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the National Urban Reconstruction and Housing Agency for the unqualified audit opinion expressed by the Independent Auditors and trust that future audit opinions will be equally unqualified.
Having considered the Annual Report, the Report of the Independent Auditors and noting the unqualified audit opinion expressed by the Independent Auditors, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Independent Auditors.
Report to be considered.
== Forty-third Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the Public Service Commission for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Public Service Commission for the unqualified audit opinion expressed by the Auditor-General and trust that future audit opinions will be equally unqualified.
The Committee, however, put questions for clarification to the Accounting Officer on matters, which according to the Committee needed attention.
Having considered the written replies from the Department, the Committee is satisfied that the Accounting Officer is attending to the matters in question in terms of their PFMA obligations concerning financial management.
Having considered the Annual Report, the Report of the Auditor-General and the replies from the Public Service Commission, the Committee is of the view that no further interaction with the Department is
necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Forty-fourth Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Independent Auditors on the South African Certification Council for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the South African Certification Council for the unqualified audit opinion expressed by the Independent Auditors and trust that future audit opinions will be equally unqualified.
Having considered the Annual Report, the Report of the Independent Auditors and noting the unqualified audit opinion expressed by the Independent Auditors, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Independent Auditors.
Report to be considered.
== Forty-fifth Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Auditor-General on the South African Qualifications Authority for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the South African Qualifications Authority for the unqualified audit opinion expressed by the Auditor-General and trust that future audit opinions will be equally unqualified.
The Committee, however, put questions for clarification to the Chief Executive Officer on matters, which according to the Committee needed attention.
Having considered the written replies from the accounting authority, the Committee is satisfied that the Chief Executive Officer is attending to the matters in question in terms of their PFMA obligations concerning financial management.
Having considered the Annual Report, the Report of the Auditor-General and the replies from the South African Qualifications Authority, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Forty-Sixth Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Independent Auditors on SERVCON Housing Solutions (Pty) Ltd for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of SERVCON Housing Solutions for the unqualified audit opinion expressed by the Independent Auditors and trust that future audit opinions will be equally unqualified.
Having considered the Annual Report, the Report of the Independent Auditors and noting the unqualified audit opinion expressed by the Independent Auditors, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Independent Auditors.
Report to be considered.
== Forty-Seventh Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Independent Auditors on the Social Housing Foundation for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Social Housing Foundation for the unqualified audit opinion expressed by the Independent Auditors and trust that future audit opinions will be equally unqualified.
Having considered the Annual Report, the Report of the Independent Auditors and noting the unqualified audit opinion expressed by the Independent Auditors, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Independent Auditors.
T
he Committee therefore awaits the next Annual Report and the Report of the Independent Auditors.
Report to be considered.
== Forty-Eight Report of the Standing Committee on Public Accounts, dated14 August 2003:
The Standing Committee on Public Accounts has held a hearing on Parliament and have considered their evidence on the Annual Reports and the Reports of the Auditor-General on the annual financial statements of Parliament, for the years ended 31 March 2001 and 31 March 2002, as well as certain papers referred to it. The Committee reports as follows:
The Committee commends the Accounting Officer and staff of Parliament for the Auditor-General's unqualified audit opinion expressed on both financial years and trust that future audit opinions will also be equally unqualified.
Noting the above, however, the Committee wishes to bring the following to the attention of Parliament:
Financial Management: PFMA applicability to Vote 2 Parliament The Committee notes the continuing uncertainty pertaining to the legislative financial management framework applicable to Parliament. In the same way provincial legislatures may themselves be in this ambiguous position.
Given that the PFMA represents the public sector financial management best practice framework and further noting the absence of a singular legislative framework for Parliament and the nine Provincial Legislatures, the Committee wishes to strongly register its utmost concern with the slow progress made in finalising the necessary legislation.
Since the absence of a clear legislative framework makes it extremely difficult for all the relevant roleplayers, the continuing delay in this regard is becoming unacceptable as it impacts on the ability to exercise proper oversight over the institution tasked with holding the executive accountable.
The Committee therefore recommends that Parliament urge the Presiding Officers of Parliament to facilitate the process of introducing draft legislation in this regard within the next twelve months. That in pursuing this matter, there also be interaction with the Speakers of the Provincial Legislatures to ensure consistency of accountability of legislatures at national and provincial levels.
Budget: Priorities and process (Par 4.1.3, page 50 and par 4.1.1, page 49 of AR) Section 3.1(d) and section 3.2 of the PFMA currently provides for the Presiding Officers to act as the
Treasury of Parliament and further provides that surplus funds may be retained by Parliament.
During the year under review, the budget was exceeded by R17,463 million that would have been regarded as unauthorised expenditure if the relevant provisions of the PFMA had been applicable to Parliament.
The Committee therefore strongly recommends that Parliament urge the Presiding Officers of Parliament to develop regulations consistent with Treasury Regulations to regulate the use of funds, which in terms of the PFMA framework might be regarded as unauthorised.
Furthermore, these regulations must also provide a sound financial management framework for dealing with donor funding and a mechanism should be put in place to ensure the continuation of programmes when donor funding comes to an end and the programmes have not been finalised.
Risk Management and Fraud Prevention Plan (Par 6, page 46 of AR) The Committee took note of the risk assessment that was completed during September 2002 and that it was taken into consideration in the development of the Fraud Prevention Plan. The Committee further took note of the implementation of a Fraud Prevention Plan as from 1 April 2003.
The Committee recommends that the Audit Committee provide a report to Parliament, within 60 days after tabling of this report in Parliament, on the effectiveness of the most recent Risk Assessment Exercise and Fraud Prevention Plans. The report should also indicate whether all risks identified have been addressed in the audit plan and that sufficient prevention has been taken to eliminate the identified risks. If required, the assistance of National Treasury should be sought.
Internal Audit (Par 4.1.9, page 52 of AR) The Committee notes management’s decision to outsource the Internal Audit function of Parliament. It was again brought to the attention of the Accounting Officer that the necessary structured arrangements should be implemented to ensure the transfer of skills to officials of Parliament appointed to the Internal Audit Division.
The Committee recommends that the Audit Committee and the newly appointed Manager: Treasury Advice and Audit submit a report to Parliament on the effectiveness of the Internal Audit Division within 60 days after tabling of this report in Parliament, including:
the extent to which the risks identified during the risk assessment exercise are covered by the internal audit plan, and
the action plan for transfer of skills to permanent internal audit staff of Parliament.
Catering (Par 4.1.4, page 50 of AR) The Committee is concerned about the current manual system in place instead of a computerised system for control over sales and stock. The Committee expressed their concern that although the implementation of a new computer system was identified as a priority during the hearing held on 8 May 2002, a new system is scheduled to be installed only during April 2003.
The Committee therefore recommends that the Accounting Officer submit a progress report to Parliament within 60 days after tabling of this report which will include timeframes of implementation and completion of the new computerised system.
Constituency allowances and financing of support staff of political parties (Par 4.1.6, page 51 of AR) It became evident during the hearing that information required of all political parties, confirming that they had implemented effective and efficient control systems for the management of allowances, was still outstanding in quite a number of cases. It also came to the attention of the Committee that the draft rules for the payment of constituents' allowances and financing of staff of political parties had not yet been approved.
The Committee recommends that:
Improved rules be drafted and implemented with immediate effect to ensure political parties have effective, efficient and transparent management and internal controls in place.
Provision is made in the rules that Parliament obtains a certificate from the political parties' auditors that funds were utilised and spent in terms of the aforementioned rules.
Donor Funding (Par 3, page 45 of AR) During the 2001-02 financial year, Parliament received donor funding in excess of R15 million. These funds are earmarked by the donors for specific projects and cannot be spent on other expenditure. Financial statements should be submitted to the donor on the spending of the funds.
During the hearing it was requested that the financial statements of these funds be forwarded to the Committee, but no such statements were received. The Committee expresses its utmost concern that when information is requested and agreed to it by the Accounting Officer that the requested information is not submitted. The Committee therefore recommends that the Accounting Officer as a matter of urgency provides Parliament with the assurance that such statements are available/exist for the 2001-02 financial year and would also be available for auditing during the 2002-03 financial year.
Accounts receivable (Note 11.1, page 63 of AR) It came to the attention of the Committee that an amount of R703 428, relating to payments for negotiations between delegations from South Africa and Zimbabwe was agreed to by the two Houses of Parliament on the understanding that National Treasury would refund the amount.
Due to Treasury not honouring this expectation, the recoverability of this amount was brought into question.
The Committee recommends that the Accounting Officer should seek advice from National Treasury regarding this matter to determine whether the said amount should be written off and that the Accounting Officer then approaches the Presiding Officers accordingly.
Report to be considered.
== Forty-ninth Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the President's Fund for the financial year ending 31 March 2002, reports as follows:
The Committee notes the qualified opinion expressed by the Auditor-General with concern.
Having considered the Report of the Auditor-General and noting the qualified opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.
Report to be considered.
== Fiftieth Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the High School Vorentoe Disaster Relief Fund for the financial year ending 31 March 2002, reports as follows:
The Committee commends the Relief Fund Board for the unqualified audit opinion expressed by the Auditor-General on the High School Vorentoe Disaster Relief Fund, and trust that future audit opinions will be equally unqualified.
Having considered the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Report of the Auditor-General.
Report to be considered.
== Fifty-first Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Refugee Relief Fund for the financial year ending 31 March 2002, reports as follows:
The Committee commends the Relief Fund Board for the unqualified audit opinion expressed by the Auditor-General on the Refugee Relief Fund, and trust that future audit opinions will be equally unqualified.
Having considered the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Report of the Auditor-General.
Report to be considered.
== Fifty-second Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the State President Fund for the financial year ending 31 March 2002, reports as follows:
The Committee commends the Relief Fund Board for the unqualified audit opinion expressed by the Auditor-General on the State President Fund, and trust that future audit opinions will be equally unqualified.
Having considered the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Report of the Auditor-General.
Report to be considered.
== Fifty-third Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Report of the Auditor-General on the Social Relief Fund for the financial year ending 31 March 2002, reports as follows:
The Committee commends the Relief Fund Board for the unqualified audit opinion expressed by the Auditor-General on the Social Relief Fund, and trust that future audit opinions will be equally unqualified.
Having considered the Report of the Auditor-General and noting the unqualified audit opinion expressed by the Auditor-General, the Committee is of the view that no further interaction with the accounting authority is necessary for the financial year under review.
The Committee therefore awaits the next Report of the Auditor-General.
Report to be considered.
== Fifty-fourth Report of the Standing Committee on Public Accounts, dated 14 August 2003:
The Standing Committee on Public Accounts, having considered the Annual Report and the Report of the Independent Auditors on the Trans Caledon Tunnel Authority for the financial year ending 31 March 2002, reports as follows:
The Committee commends the management of the Trans Caledon Tunnel Authority for the unqualified audit opinion expressed by the Independent Auditors and trust that future audit opinions will be equally unqualified.
Having considered the Annual Report, the Report of the Independent Auditors and noting the unqualified audit opinion expressed by the Independent Auditors, the Committee is of the view that no further interaction with the accounting authority is necessary for the year under review.
Report to be considered.
== Fifty-fifth Report of the Standing Committee on Public Accounts, dated 2 September 2003:
The Standing Committee on Public Accounts, having heard and considered evidence on the Report of the Auditor-General on the financial statements of Vote 13 — Health for the year ended 31 March 2001 [RP 123/2001], and certain papers referred to it, reports as follows:
SARAFINA II
1. BACKGROUND AND FINDINGS The issue has taken a long time to be satisfactorily resolved - it started in 1995. However, it is the Committee's view that appropriate measures should have been taken to bring this issue to a close.
After giving due consideration to all the information on the matter regarding the unauthorised expenditure emanating from the Sarafina II saga, as well as considering a comprehensive report from the Accounting Officer, as requested during the hearing of 29 August 2001, and consulting with the Parliamentary Law Advisers, the Committee noted the following:
Assets to the value of R2 211 138,79 were recovered from the company to which the contract was awarded. The Department had the option of publicly disposing these assets, but upon invitation, the Department of Defence opted to utilise these assets. In the process, no cash flow materialised. An amount of R51 000,00 (cash) was recovered by the Special Investigating Unit and paid over to the Department. From the total unauthorised amount of R10 519 202,30, an amount of R10 468 202,30 therefore remains unauthorised.
The findings of all the investigations indicate a serious lack of financial discipline and control, amounting to negligence, on the part of the two individuals concerned.
Action could have been taken by the Accounting Officer to prevent, or at least reduce, the extent of the unauthorised expenditure.
Until the date of adoption of the Eleventh Report, 2001 an amount of R576 595,59 was already been spent on legal costs in an attempt to recover the loss suffered by the State.
Work conducted by investigating agencies such as the Public Protector, the KPMG Forensic Auditors and the Special Investigating Unit was of great help in identifying serious irregularities and unauthorised expenditure.
Sufficient measures and actions were not taken by the Department and the Special Investigating Unit to recover the money from the two individuals concerned.
Directors-General are appointed as accounting officers, and as such have a very specific and direct responsibility to act as custodians of taxpayers' money.
Parliament is tasked with the responsibility of authorising unauthorised expenditure if sufficient grounds exist and evidence indicates that the circumstances that gave rise to the unauthorised expenditure were both urgent and unavoidable.
The information supplied about the asset base and financial status of those responsible for expenditure was not properly verified and therefore added doubt to the recoverability of the full amount lost.
The more effective control environment provided by consistent compliance with PFMA guidelines and the Treasury Regulations presents accounting officers with a sound financial management framework that should prevent recurrence of incidents similar to this one.
It is the Committee's firm belief that Parliament does not only have a mandate to oversee financial management compliance, but must be seen to be guarding the best interest of taxpayers and the most effective and efficient use of limited state resources.
2. RECOMMENDATIONS
A. CONCERNS RAISED / LESSONS LEARNT In the light of the seriousness of the matter the Committee recommends that:
All government departments and public entities must:
be more alert in order to prevent the occurrence of prescription, and
do a regular asset determination on people who have defaulted such departments and entities.
The Department of Public Service and Administration consider an effective measure by which government officials can be held accountable for their actions even after they had left positions where they had not met their responsibilities.
Any deviation from initial findings, such as in the case of the withdrawal of legal action against the Minister of Health and the Committed Artists Theatre Company, must in future be fully substantiated in subsequent reports.
B. UNAUTHORISED EXPENDITURE The Committee further recommends that the remaining amount of R10 468 202,30 of the total unauthorised expenditure of R10 519 202,30 (even though assets to the value of R2 211 138,79 was recovered and due to legal accounting technicalities), be authorised by Parliament to bring this issue to a close.
Report to be considered.
== Fifty-sixth Report of the Standing Committee on Public Accounts, dated 2 September 2003:
"There is consensus among the Public Accounts Committees of African Parliaments that stricter control and monitoring of the expenditure of the Executive Authority should be a priority."
The Chairperson of SCOPA, Francois Beukman, attended the World Bank Institute and the Commonwealth Parliamentary Association’s regional seminar for African multiparty democracies in Accra, Ghana that was held from 11-14 August 2003.
The Conference was attended by members of Public Accounts Committees from Botswana, Gambia, Kenya, Lesotho, Mozambique, Nigeria, Seychelles, Sierra Leone, Uganda, Namibia and Zambia. Senior management officials from the World Bank and the Commonwealth also attended the conference.
This followed a similar seminar presented by the World Bank and the CPA for the Indian Ocean area in Sri Lanka in June.
The focus of the seminar was on three central themes, namely:
The strengthening of the role of Parliament in relation to the Executive Authority;
The strengthening of the role of the Public Accounts Committees with regard to the Executive Authority;
Ways in which the capacity and impact of Public Accounts Committees can be strengthened.
The seminar not only had the value of a talking-shop, but also afforded members of Parliament an opportunity to place the specific requirements of Public Accounts Committees on the table.
In its project financing for client states, the World Bank renders financial support to parliaments, and specifically to public accounts committees.
One of the reasons for this is that new democracies do not possess sufficient funds for the oversight and monitoring role of Parliament.
In the case of the South African Parliament, the EU has, over the past few years, made major contributions towards the establishment of a more effective Parliament.
In the case of APAC (the Association of Public Accounts Committees of South Africa), direct financial support is provided for training and capacity-building on the part of members of Parliament.
The Department of Foreign Development of the United Kingdom also provides assistance to SCOPA for research support and capacity-building on the part of the committee.
The dilemma is that African parliaments do not have sufficient resources for researchers and experts, when compared to those of the Executive Authority."
Strong Executive Authority governments possess adequate resources, whilst the oversight committees of parliaments have to play a comprehensive role with limited support.
It is therefore of cardinal importance that parliaments should make adequate provision in their three-year MTEF expenditure frameworks for primary oversight committees.
The World Bank has moved away from individual project support towards budgetary support. The focus is on working together with parliaments.
The World Bank’s support in respect of budgetary aid to parliaments is to triple from [500 000] US dollars to 1,4 billion US dollars in the next 18 months.
It emerged at the conference that quite a number of states are placing a far greater emphasis on the combating of corruption, and specifically the role of parliamentary committees. Parliamentary monitoring between budgetary approval and expenditure is coming into focus to a greater extent than before.
In Ghana a national inquiry has been conducted by the Public Accounts committee into corruption in the Justice department.
In Kenya a campaign is under way against corruption in government departments.
It is apparent that appropriate follow-up procedures are a problem in the case of most committees, and most committees desire a better reaction from the Executive Authority.
The World Bank is conducting an investigation into the role of the Public Accounts Committees. Thirty committees in South-East Asia, the Americas and Europe have already been investigated in order to advance accountability in relation to the Executive Authority.
The investigation is being extended to Africa, and a comprehensive questionnaire was completed by chairpersons of public accounts committees in Accra.
It is symbolically important that the members of Parliament of the West African Commonwealth states and those of Southern Africa should discuss and analyse the issues, since the third and fourth waves of democratisation in West Africa are decisive for the strengthening of multiparty democracy.
The capital city of Ghana, which, after a period of military government in the 1980s, has been a democracy for the past few years, is currently also the centre for the occurrence of the Liberian peace process. The Ashanti-Goldfields initiative, too, makes Ghana a natural source for co-operation with South Africa.
SCOPA South Africa has made use of the opportunity to make the new SCOPA working method guidelines available to the other public accounts committees.
The Chairperson of SCOPA, Francois Beukman, also participated as a member of the panel dealing with the theme "Strengthening of the Role of Public Accounts Committees".
Rajaz Gomez, Director: Development of the Commonwealth Parliamentary Association, emphasised the following aspects:
There is a need for greater contact between international organisations and parliaments, and specifically public accounts committees.
A major challenge lies in getting members of Parliament interested in the work of Public Accounts Committees.
There should be a greater willingness on the part of parliaments to play an oversight role, aside from the representative and legislative role.
Rick Stapenhurst, Director: Policy of the World Bank Institute:
It is vitally important that researchers/support staff of parliaments be strengthened.
Parliaments must play an active role in promoting anti-poverty strategies.
Parliamentary oversight is a priority for the World Bank in monitoring the expenditure of donor money.
Regional co-operation with regard to training is essential.
Points of consensus reached at the seminar:
The following points of consensus were recommended by participants at the seminar:
It is important to have an independent Auditor-General whose appointment must be approved by Parliament.
The Auditor-General must have officials liaising with Public Accounts Committees.
The Auditor-General must have sufficient resources to perform his/her functions.
The Auditor-General and Public Accounts Committees must act in an impartial manner.
The Auditor-General and public accounts committees must hold joint seminars/workshops in order to share opinions on procedure and policy.
International organisations/donors should assist Public Accounts Committees and Auditors-General with capacity-building.