Second Report of the Standing
Committee on Public Accounts on the Annual Report and the Report of the
Independent Auditors on the financial statements of the South African Airways
(SAA) for the year ended 31 March 2006, dated 29 January 2008
The Standing Committee on Public Accounts (SCOPA), heard and considered
evidence on the Annual Report and the Report of the Independent Auditors on the
financial statements of the South African Airways (SAA) for the year ended 31
March 2006,
The Committee noted the unqualified audit opinion expressed by the Independent
Auditors, and trusts that future audit opinions will be equally unqualified. However, the Committee raised its concerns on the
following matters and reports as follows:
GOING CONCERN
SAA has been forced to review its structures and core businesses in order to
remain a competitive, profitable and the airline of choice on the African
Continent. The Board has approved the proposed plan for restructuring and work
has commenced on certain aspects of implementation.
All the restructuring processes will be completed within the next 18 month.
The Committee recommends that the Accounting Authority ensures that:
a)
restructuring is successfully approved, efficiently funded and implemented
b)
revenue management is enhanced through the recruitment of
suitably qualified and skilled staff
c)
training to staff on use of
revenue accounting system is provided
d)
management embarks on the
restructuring as decided and ensure that it is properly approved and funded
e)
all deadlines are met and Parliament is updated with the
progress report
f)
the low morale of
staff is addressed urgently.
COMPLIANCE WITH
LEGISLATION
SAA has embarked on a strategy to comply with the laws and regulations
affecting its operations. A monitoring plan to monitor compliance with laws and
regulations has been approved and is currently being implemented. Until the
monitoring plan is fully operational, SAA is unable to confirm compliance with
legislation and regulation.
The Committee recommends that Accounting
Authority ensures that:
a.
management fully
implement processes and systems to monitor compliance with all applicable
legislation;
b.
management implement the necessary
systems and processes to monitor compliance with the PFMA and also finalise the
shareholders compact to agree with performance criteria;
c.
Parliament is quarterly updated with
regard to the effective implementation of the regulations.
Capacity and/or people related
issues (financial skills)
The staff members involved in the revenue accounting do not
possess the necessary skills and experience to
utilise the new revenue accounting system (RAPID).
The problems encountered in revenue accounting,
amongst others, included:
a.
the lack of control surrounding the
safekeeping of manual tickets and flight manifests;
b.
errors with the allocation of the
total ticket revenue collected for the various sectors of the itinerary
included in the ticket;
c.
suspense accounts not being cleared
for payments received for tickets, however the sales information has not been
captured on RAPID;
d.
delays
in processing interline claims. Claims not processed within 6 months are forefeited.
The Committee recommends that the Accounting Authority
ensures that:
a.
staff
with relevant skills and qualifications are considered to fill the RAPID posts
and appropriate training be provided where it is lacking;
b.
systems are put in place to ensure
that all claims are processed on time and all
transactions are cleared timeously.
4. Mango
Airline
The Committee noted the establishment of the Mango-airline as a full subsidiary
of SAA.
The Committee recommends that the Accounting Authority provides Parliament with
a cost benefit analysis in terms of value for money to the taxpayer in
justification of the establishment of the airline.
The Committee commends the management of SAA’s
commitment in following up and addressing the system weaknesses regarding
procurement transgressions identified by the auditors during the previous years. SAA management must furnish the
Committee with a progress
report on this issue within 60 days of the adoption of this report by the
National Assembly.
Report to be
considered.
2. Third Report of the Standing Committee on Public Accounts on the Annual
Report and the Report of the Auditor-General on the financial statements of the
Department of Defence, for the year ended 31 March
2007, dated 29 January 2008
SECTION A
The Standing Committee on Public Accounts (SCOPA) heard and considered evidence
on the Annual Report and the Report of the Auditor-General on the financial
statements of the Department of Defence, for the year
ended 31 March 2007.
The Committee noted the qualified audit opinion expressed by the
Auditor-General. The Committee raised its
concerns on the following matters and reports as follows:
1.Tangible & intangible assets,
accruals, irregular, fruitless and wasteful expenditure, rank review and
comparatives
The Auditor-General’s report highlighted that:
a.
The
department did not manage, develop, and revise its information systems in an
effort to continually improve the usefulness and reliability of its
communication of information.
b.
The
department’s current information systems do not comply with National Treasury’s
requirements as per the accounting framework, specifically in respect of tangible
and intangible capital assets and accruals.
c.
Control
activities including review at functional level, physical control, segregation
of duties and timely authorization identified as necessary, are not in place
and are not being applied with respect to tangible and intangible capital
assets.
d.
Appropriate
policies, procedures, techniques and mechanisms do not exist with respect to
the proper identification and recording of irregular, fruitless and wasteful
expenditure.
e.
There
is a lack of sufficient, appropriate supporting documentation and approval to
support the eligibility of each member’s promotion as part of the rank
adjustment process.
The Committee recommends that the
Accounting Officer ensures that:
a.
The current information systems used, is upgraded or
alternatives be investigated to implement a single logistical system that
can provide the financial information as required by National Treasury in
respect of accruals, tangible and intangible capital assets.
b.
Shortcomings in the information systems are reduced by
implementing manual controls to ensure proper identification, classification,
recording and disclosure of accruals and tangible intangible capital assets.
c.
Policies
and procedures are developed, approved and implemented to ensure the proper
identification, classification, recording and disclosure of irregular,
fruitless and wasteful expenditure in the annual financial statements.
d.
A
complete investigation is launched to determine the extent of the invalid rank
adjustment cases and related irregular expenditure or overpayments. The
Accounting Officer must also report in terms of section 38(1)(g) of the Public
Finance Management Act, 1999 (Act No. 1 of 1999) in writing immediately to
National Treasury on discovery of irregular expenditure,
2. Travel and
subsistence, Prepayments and advances, Receivables, Departmental revenue
The Committee noted
that the validity and completeness of S&T claims and advances could not be
verified due to the fact that they could not be traced back to the relevant
supporting documentation. The completeness of receivables could not be
confirmed due to the fact that transactions and other significant events were
not properly classified and promptly recorded. Furthermore, the department is
losing revenue due to unserviceable equipment situated in the mission areas,
which could have been prevented had reasonable care been taken.
The Committtee
recommends that the Accounting Officer ensures that:
a) The Financial Management System
(FMS) is upgraded to improve the usefulness and reliability of travel S& T
information.
b) Management implement
a strategy to enforce ongoing monitoring, compliance and control over the
serviceability of assets deployed to mission areas.
c) Adequate and sufficient training is
provided to employees in respect of the administration of receivables.
d) Management perfom
independent reconciliations and review information on a regular basis to ensure
proper classification and prompt recording of transactions and that sufficient documents are kept and always available.
3. Lease commitments, commitments and clearing accounts
The report highlighted that:
a) Transactions and other significant
events were not properly classified and not promptly recorded in respect of
lease commitments;
b) Appropriate policies, procedures,
techniques and mechanisms do not exist in respect of each of the department’s
activities. This resulted in the commitments understated with an amount of at
least R3 192 509; and
c) Necessary control activities were
not in place and not being applied with respect to clearing accounts.
The Committee
recommends that the Accounting Officer ensures that:
a) Internal controls are implemented to
ensure that transactions and other significant events with respect to lease
commitments are properly identified, classified, promptly recorded and
disclosed.
b) Management institutes control
processes by which all financial authorizations approved and not fulfilled are
collated and included as part of commitments at year end.
c) The implementation of control
activities is in place to ensure that sufficient and appropriate evidence
exists for amounts included in the clearing accounts and that these accounts
are cleared monthly.
4.Regional Service
Council levies (RSC) and Contingent liabilities
The amount paid in respect of RSC levies is understated by an amount of
approximately R3 130 038. Furthermore, no supporting evidence could be
submitted to substantiate accruals amounting to R37 922 268. Appropriate
policies, procedures, techniques and mechanisms do not exist with respect to
the proper identification and recording of contingent liabilities arising from
the National Environmental Management Act, 1998 (Act No. 107 of 1998)(NEMA).
The Committee recommends that the
Accounting Officer ensures that:
Management reconciles and reviews the
calculation of RSC levies and ensure that DoD complies with all aspects of the
Regional Service Council Act, 1995 (Act No 109 of 1995) (regarding what should
be included in determining remuneration in order to calculate these levies).
Appropriate policies, procedures, techniques and mechanisms are
implemented to ensure the proper identification, classification and recording
of contingent liabilities arising from NEMA.
5. Misclassification of expenditure
The Committee noted
that management did not review at functional or activity levels, those results
in misclassification of expenditure in the financial statements.
The Committee recommends that the Accounting Officer ensures proper classification of expenses
to enable a true reflection in the Annual Financial statements.
SECTION B
6. SPECIAL DEFENCE ACCOUNT (SDA)
The Committee noted the following shortcomings:
a.
lack
of financial reporting framework classification
b.
approved
constitution for the Compliance Programme is still
awaited
c.
no policy, procedures and/or documented approval from National Treasury governing
the handling of moneys to the credit of the SDA.
The Committee recommends that the Accounting Officer ensures that:
a.
The
accounting framework applicable to the SDA and the classification of the SDA,
which have been outstanding since 2004/05, is clarified with National Treasury
as a matter of urgency.
b.
Since
the DoD has referred the matter of the approval of the constitution
of the compliance programme to the Department of
Foreign Affairs, the Accounting Officer should follow-up with the Department of
Foreign Affairs and report back to Parliament within 60 days of the adoption of
this report by the National Assembly.
c.
Surplus
funds not required for immediate use are invested and withdrawn when
necessary.
d.
A
policy governing investments of all moneys to the credit of the account is
compiled with, approved and implemented as a matter of urgency. If investing is
not the way to go, the Defence Special Account Act,
1974 (Act No. 6 of 1974) must be amended.
SECTION C
PERFORMANCE AUDIT
7.Catering services rendered in DoD as
conventional, outsourced and commercialised messes
The report highlighted
numerous types of messes that render catering services for the SA Army, SA
Navy, SAAF and SAMHS. The various messes are:
a.
Conventional
- the DoD supplies all personnel and facilities with
commodities that are purchased through DoD contracts;
b.
Outsourced
- the DoD contracts out the catering service to a
private service provider and payments are made according to
contract specifications. The contractor is responsible for all personnel and
commodities and utilises the DoD’s facilities; and
c.
Commercialised
– the DoD pays the operating
costs of these messes.
The most cost-effective
messes were outsourced messes, then commercialised messes and the least
cost-effective were conventional messes.
The committee recommends that the
Accounting Officer ensures that:
a.
management furnishes Parliament with a comprehensive quarterly
progress report with regard to the status of messes and the cost to feed a
staff member per day;
b.
the
SA Army starts reducing their catering costs;
c.
SAAF
and the SA Navy re-evaluate the possibility to commercialize conventional
messes;
d.
a feasibility study is conducted by the SAMHS to determine whether
outsourcing their catering services at good quality hospitals will be cost
effective.
8. Other shortcomings identified during the audit
Budget control for catering
services was not effective and led to overspending by the SA Army and the
SAMHS during the 2005-06 financial years.
The central administration of contracts by the Procurement Service Centres was
un-economical, inefficient and ineffective, which led to overpayments and
payments on contracts that were not renewed or advertised timeously,
thus causing additional costs for the DoD.
The Committee recommends that the
Accounting Officer ensures that:
a.
Controls are put in place to ensure
that processes are followed as instructed in the guidelines and policies
especially with regards to the budget;
b.
Unnecessary costs are avoided;
c.
Disciplinary actions are taken
against officials, if processes are not followed as instructed by the PFMA.
Report to be considered.
3. Fourth Report of the Standing Committee on Public
Accounts on the Annual Report and the Report of the Auditor-General on the
Financial Statements of the Department of Health (NDoH)
for the Financial Year Ending 31 March 2007, dated 29 January 2008
The Standing Committee
on Public Accounts (SCOPA) heard and considered evidence on the Annual Report
and the Report of the Auditor-General on the Financial Statements of the
Department of Health (NDoH) for the Financial Year
Ending 31 March 2007, and reports as follows:
For the 2006-07 financial year, the Auditor-General expressed a
qualified audit opinion on the NDoH. SCOPA therefore
requests the Accounting Officer to urgently address the following:
1. Systems-related matters
a. Asset management
The Auditor-General reported that, due to lack of reconciliations between the
fixed asset register and the basic accounting system, he was unable to obtain
adequate assurance regarding the negative adjustment totalling R31 million to
the opening balance of R84 million. This adjustment was due to lack of
monitoring of controls developed to ensure the safeguarding, reporting and
maintenance of assets.
In terms of Treasury Regulation 10.1 and section 38(1)(d)
of the Public Finance Management Act, the Accounting Officer of a department
must take full responsibility and ensure that a proper control system exists
for the recording and safeguarding of assets.
SCOPA therefore recommends that the
Accounting Officer urgently ensures that:
a. the necessary capacity and proper monitoring of controls are developed to
ensure the safeguarding, reporting and maintenance of assets.
b. Division of Revenue Act (DORA)
The Auditor-General reported on the following problems with regard to the
management of the Division of Revenue Act (DoRA):
i. The
business plans, quarterly performance reports and monthly financial reports
from the provinces were either not submitted for approval and monitoring
purposes, or submitted late.
ii. Quarterly provincial liaison and visits to the
provinces to physically monitor compliance with the DoRA
were not always carried out due to shortage of staff.
iii. Information submitted in the provincial reports
was inadequately evaluated, which did not enable the timeous
identification of potential non-compliance with the conditions attached to
these grants.
SCOPA therefore recommends that the Accounting Officer urgently ensures
that:
i. business plans, quarterly performance
reports and monthly financial reports from the provinces are timeously submitted for approval and monitoring
ii. there
are properly skilled staff at the required level to perform provincial liaison
and visits to physically monitor compliance with the DoRA
iii. there
is proper monitoring and control to ensure compliance with the conditions
attached to the grants.
(c) Transfer payments
The Auditor-General reported that, due to lack of monitoring of controls
developed to ensure compliance, payments to the value of R35 million were made
to an NGO in contravention of section 2.3 of the National NGO Funding Guideline
which requires that service level agreements (SLAs)
are signed before the funds are transferred.
SCOPA therefore recommends that the
Accounting Officer urgently ensures that:
i. there
is sufficient capacity to ensure compliance with legislation, procedures and
guidelines.
2. Governance-related matters
The Auditor-General reported that, due to lack of a management framework, the NDoH did not comply with the National Environmental
Management Act, 1998 (Act No. 107 of 1998) (NEMA) which requires the department
to prepare an environmental plan within a year of promulgation of the act and
every four years thereafter.
SCOPA therefore recommends that the
Accounting Officer:
i. establish
a management framework to ensure compliance with legislation and regulations.
3. South African National Aids Trust
(SANAT)
The Auditor-General expressed an unqualified audit opinion on SANAT, with
Emphasis of Matters on non-compliance with the Deed of Trust, section 53(1)-(5)
of PFMA and the Public Audit Act, No. 25 of 2004.
The Deed of Trust sets out the objectives of the trust and requires that
official meetings are held. Due to limited operations of the trust, the
objectives were not met and no official meetings were held.
Section 53(1)-(5) of the PFMA requires that the budget of the trust is
submitted to the Board of Trustees. According to the Auditor-General, the
budget was not submitted.
SCOPA therefore recommends that the
board:
i. ensures
compliance with the relevant legislation and the Deed of Trust so that it can
realise its mandate.
Report to be considered.
4. Fifth Report of the Standing
Committee on Public Accounts on the Annual Report and the Report of the
Auditor-General on the Financial Statements of the Department of Correctional
Services (DCS) for the Financial Year ending 31 March 2007, dated 29 January
2008
The Standing Committee
on Public Accounts (SCOPA) heard and considered evidence on the Annual Report
and the Report of the Auditor-General on the Financial Statements of the
Department of Correctional Services (DCS) for the Financial Year ending 31
March 2007, reports as follows:
For the 2006-07 financial year a qualified audit opinion was expressed
by the Auditor-General on the financial statements of the DCS. SCOPA requests
the Accounting Officer to urgently address the following:
3. Asset management
The Auditor-General reported the following shortcomings with regard to internal
controls:
i. No
reconciliation was performed between the three different computer systems used
by the department with regard to assets.
ii. No independent reviews were done
by management.
iii. Inadequate policies and
procedure manuals were used and this led to inadequate business processes.
SCOPA recommends that the Accounting
Officer ensures that:
i. a
reconciliation is performed to ensure that all assets are captured;
ii. policies
and procedures are updated and there is compliance with these policies and
procedures.
2. Buildings and other fixed assets
The Auditor-General could not perform audit procedures regarding
improvements/additions to the value of R1,252 billion,
as the building that was renovated belongs to the Department of Public Works,
but is disclosed in the books of the DCS.
SCOPA therefore recommends that the
National Treasury, DCS and Department of Public Works should solve this issue
as a matter of urgency.
3. Medical expenditure
The Auditor-General reported the following shortcomings with regard to medical
expenditure:
i. He could not verify the validity and
accuracy of an amount of R169 million for continuing members.
ii. Life certificates obtained did
not include dependants’ information.
iii. In certain instances,
contributions were made for deceased members.
SCOPA recommends that the Accounting
Officer ensures that:
i. detailed
information on continuing members is requested on an annual basis
ii. measures
are put in place to verify that members are still alive
iii. invoices
and supporting documents are verified before payments are made
iv. money
paid to medical aid on behalf of deceased members is paid back to the
department and disciplinary action is taken against employees in cases where
corruption or negligence is proven.
4. Receivables
The Auditor-General reported a recurring problem with
receivables. For the 2006-07 financial year, an amount of R40 million for staff
debtors could not be verified for completeness or accuracy.
SCOPA therefore recommends that this
issue is addressed as a matter of urgency and that monthly reconciliations are
done.
5. Vacancies
A high vacancy rate in critical occupations such as health professionals,
finance, economics and information technology was reported.
SCOPA recommends that the Accounting
Officer ensures that vacant positions are filled and the department’s
retention strategy is implemented successfully.
5. Consultants
SCOPA is concerned over the increase in the use of
consultants by the department.
The committee therefore recommends that
the department ensure that there is proper skills transfer to staff to
eventually decrease the department’s dependence on consultants.
6. Public-private partnerships (PPP)
The public-private partnerships (PPP) were designed to assist government in the
provision of correctional facilities. In the case of the DCS, the aim is that
high security risk inmates are transferred to the private sector.
For the 2006-07 financial year, a cost of R560, 260
million was incurred by the department on the PPP.
SCOPA therefore recommends that the
department supply it with a cost benefit analysis in terms of value for money
to the tax payer on the envisaged PPP within 60 days of the adoption of this
resolution by the National Assembly.
SCOPA further recommends that this
matter be referred to the Portfolio Committee on Correctional Services for
monitoring.
Report to be considered.
5. Sixth Report of the Standing
Committee on Public Accounts on the Annual Report and the Report of the
Auditor-General on the Financial Statements of the Department of Justice and
Constitutional Development (DoJ&CD) for the
Financial Year Ending 31 March 2007, dated 29 January 2008
The Standing Committee
on Public Accounts (SCOPA) heard and considered evidence on the Annual Report
and the Report of the Auditor-General on the Financial Statements of the
Department of Justice and Constitutional Development (DoJ&CD)
for the Financial Year Ending 31 March 2007.
The Committee noted the
qualified audit opinion expressed by the Auditor-General. The Committee raised
concerns that needed the urgent attention of the Accounting Officer of the
Department and reports as follows:
1. Governance arrangement
The Auditor-General reported that the current status of Third Party Funds, on
which he had issued a disclaimer of opinion, was a direct result of the
department’s attitude, in that there was a lack of accepting accountability and
responsibility for the fund’s day-to-day activities.
The Auditor-General further informed SCOPA that National Treasury had issued a
letter on
SCOPA recommends that the Accounting
Officer ensure that this matter is addressed as a matter of urgency.
2. Capacity or people-related issues
The Auditor-General reported the following shortcomings:
·
The
vacancy rate at the department increased from 20% in the 2005-06 financial year to 23% in 2006-07, and this had a severe impact on the
strategic objectives and operations of the department.
·
Appropriate
disciplinary action was not taken against responsible employees, as the same
findings on departures from approved policies and procedures were repeatedly
noted.
·
Management
and employees did not display a positive attitude toward internal control in
all instances.
SCOPA therefore
recommends that the Accounting Officer ensures that:
·
critical
positions are filled
·
disciplinary action is taken against employees whose negligence has been
proven and a report is submitted to Parliament within 60 days of the adoption
of this report by the National Assembly.
3. NATIONAL
PROSECUTING AUTHORITY (NPA)
The Auditor-General issued a qualified audit opinion on the financial
statements of the NPA as a result of the following shortcomings:
3.1. Accountability and governance
status of the NPA
No finality had been reached on the definition of the duties of the Accounting
Officer.
The NPA had not been listed as an entity in terms of the PFMA.
The mechanism for the funding of the NPA had not been finalised.
SCOPA recommends that these matters are finalised as a matter of urgency to ensure that the NPA realises its mandate.
3.2. Capacity or people-related issues
The Auditor-General reported a 30.7% vacancy rate at the NPA, which had a
severe impact on the strategic objectives and operations of the NPA.
SCOPA recommends that vacant positions are filled to ensure that strategic objectives
are achieved and the operations of the NPA run smoothly.
4. CRIMINAL ASSET RECOVERY ACCOUNT (CARA)
The Criminal Asset Recovery Account is administered by the Criminal Asset
Recovery Unit (CARU).
The Auditor-General expressed a
qualified audit opinion on the financial statements of CARA due to the
following shortcomings:
·
No
system or process was in place to enable CARU to account for and track the
status of finalised confiscation and forfeiture
orders and to track all cases handed over to curators.
·
No
policies and procedures existed in respect of, amongst others:
·
maintaining
and safeguarding assets forfeited to the state under their control
·
enforcing
accountability of curators
·
accounting for cash in the custody of curators due to the uncertainty
of the curator fees that must be deducted prior to cash being deposited.
·
An
80% vacancy rate for staff servicing the CARA.
SCOPA therefore
recommends that, as a matter of urgency:
·
A
system or process is put in place to enable CARU to fulfil
its mandate
·
Policies
and procedures are implemented
·
Vacancies
are filled.
Report to be
considered.
6. Seventh Report of the Standing
Committee on Public Accounts on the Report of the Auditor-General on an
Investigation into Procurement at the Department of Justice and Constitutional
Development (DoJ&CD), for March 2007, dated 29
January 2008
The Standing Committee
on Public Accounts (SCOPA) heard and considered evidence on the following
matters and reports as follows:
1. Procurement process
The Auditor-General reported lack of planning which led to non-compliance with
the Supply Chain Management Policy and Treasury Regulations.
SCOPA therefore recommends that the
Accounting Officer ensures that tender procedures are followed well in advance,
before the expiry of current contracts.
2. Bid documents
The Auditor-General reported that there were inadequate internal controls to
ensure that bid documents were factually correct, and as a result, bids had to
be cancelled. The DoJ&CD incurred costs that
could have been avoided, had reasonable care been taken.
SCOPA therefore recommends that bid documents are thoroughly checked for
factual correctness by the relevant officials and they comply with relevant
legislation.
3.Contract awarded
It was reported that the service providers in the five provinces, that obtained
the highest number of points, were not appointed and no justifiable reasons for
this decision was recorded.
SCOPA therefore recommends that the
Accounting Officer ensure that contracts are awarded to service providers as
stipulated in legislation and policies.
4. Declaration of interest forms
The Auditor-General reported that it could not be confirmed whether members of
the departmental bid committee had filed the declaration of interest forms.
SCOPA recommends that the Accounting
Officer ensure that members of the departmental bid committee declare their
interests as prescribed.
5. Conclusion
SCOPA noted that the DoJ&CD had not been
complying fully with the requirements of supply chain management.
SCOPA therefore recommends that the
Accounting Officer:
a.
urgently
addresses all the problems highlighted by the Auditor-General
b.
report
back to Parliament within 60 days of the adoption of this resolution by the
National Assembly on the progress made with the following issues:
i. his instruction to the Chief
Financial Officer to address the supply chain management problems, as well as
the actions initiated against responsible staff and suppliers
ii. disciplinary measures taken against officials
who were charged or found guilty of misconduct for awarding contracts to
service providers that did not qualify
iii. how
the instances of fruitless and wasteful expenditure, due to bids being
cancelled because of non-factual information supplied has been dealt with.
Report to be considered.
7. Eighth Report of the Standing
Committee on Public Accounts on the Annual Report and the Report of the
Auditor-General on the Financial Statements of the Department of Public Service
and Administration (DPSA) for the Financial Year Ending 31 March 2007, dated 29
January 2008
The Standing Committee
on Public Accounts (SCOPA) heard and considered evidence on the Annual Report
and the Report of the Auditor-General on the Financial Statements of the
Department of Public Service and Administration (DPSA) for the Financial Year
Ending 31 March 2007, and reports as follows:
For the 2006-07 financial year the DPSA had an unqualified audit
opinion, however, SCOPA requests the Accounting Officer to urgently address the
following:
4. Governance-related matters
c. Audit committee
The Auditor-General reported that the DPSA did not have an audit committee in
place for six months of the financial year under review.
SCOPA therefore recommends that the
Accounting Officer ensures
i. compliance with section 77 of the
PFMA that refers to the establishment of an audit committee.
5. Risk management
The Auditor-General reported that the Department did not have a risk management
strategy, risk management policy, and that the risk committee only met once for
the year under review.
SCOPA therefore recommends that the
Accounting Officer ensures that:
a.
The Department complies with section
38 of the PFMA which requires the maintenance of an effective and efficient
risk management process.
b.
A risk management strategy is
finalised.
c.
Vacant positions are filled.
6. Systems-related matters
The Auditor-General reported the following shortcomings with regard to internal
controls:
a.
Inadequate systems and procedures
with regard to all commitments and lease commitments;
b.
Inadequate monitoring over assets;
c.
Unavailability of a disaster
recovery plan;
d.
Unapproved information security
policy.
SCOPA therefore recommends that the Accounting Officer:
a.
Reports progress in addressing the
above issues to Parliament within 60 days of the adoption of this resolution by
the National Assembly.
4. Public Sector Education Training Authority (PSETA)
The Auditor-General identified an uncertainty over the going-concern status of
PSETA, due to a total dependence on the DPSA as a source of income.
SCOPA recommends that the Accounting
Officer ensures that
a. This entity becomes
self-sufficient through imposing levies, on the same basis as other SETAs, rather than depending on the transfer payment from
the DPSA, to ensure that it will deliver on its intended mandate.
The Auditor-General informed
SCOPA that a police investigation was conducted during the year on suspected
fraud that was discovered in the learnerships within
PSETA, and that arrests were made; also, that a forensic investigation was
underway.
SCOPA therefore requests that the
Accounting Officer
a.
To report back to the Committee on
the arrests made, within 60 days of the adoption of this report by the National
Assembly and that the forensic investigation report is shared with SCOPA once
it has been completed.
Report to be considered.
8. Tenth Report of the Standing Committee on Public Accounts
on the Consideration of the Approval of Unauthorised
Expenditure incurred by the Department of Land Affairs, dated 29 January 2008
The Committee considered evidence relating to the unauthorized expenditure in
terms of the PFMA totaling R7, 182.00 that arose owing to the cost of contract
services for the Lephotsoana ll
Trust open day celebrations attended by ex-President Mandela in 2000/01 and
reports as follows:
The Accounting Officer confirmed that:
a)
services
for the expenditure were received to the satisfaction of the department;
b)
no
individual benefited unduly from such expenditure and;
c)
control measures are in place to prevent this from re-occurring.
Recommendation
Having considered the evidence and the steps taken by
the Accounting Officer to prevent similar cases of unauthorized expenditure
from re-ocurring, the Committee recommends the
approval of the amount of R7, 182.00 by
Parliament.
Report to be considered.
9 Eleventh Report of the Standing
Committee on Public Accounts on the Consideration of the Approval of Unauthorised Expenditure incurred by the Presidency, dated
29 January 2008
The Standing Committee on Public
Accounts (SCOPA) reports as follows:
The committee notes unauthorised expenditure totalling R15 331.06, which is
made up of amounts that were outstanding when approval was granted for the
overspending in 2000-01.
In the written evidence on the above-mentioned instances of unauthorised
expenditure, the Accounting Officer confirmed that:
·
The overspending was of a technical
nature and did not result in any losses to the state or the taxpayer.
Recommendation
In light of the above, SCOPA recommends that Parliament approves the amount of
R15 331.06.
Report to be considered.
10. Twelfth Report of the Standing
Committee on Public Accounts on the Consideration of the Approval of the Unauthorised Expenditure incurred by the Department of
Justice and Constitutional Development, dated 29 January 2008
The Standing Committee on Public Accounts (SCOPA) reports as follows:
The Committee notes unauthorised expenditure totalling R139 052 849.71,
incurred during the following years: 1999-2000, 2000-01, 2001-02 and 2002-03,
and reports as follows:
|
R5 199 704.46: |
Attributed to increased personnel expenditure
without the prior approval by the National Treasury |
|
R844 416.00 |
The witness protection unit entered into a lease for
an investigation in excess of R30 000.00 without inviting tenders. Due to
security reasons normal procedures could not be followed |
|
R23 884 729.25 |
Overspending on the administration of the courts
(personnel overspending in 2001-02) |
|
R63 014 000.00: |
Overspending on Programme 1 |
|
R46 110 000.00: |
Overspending on the administration of the courts
(personnel overspending in 2002-03) |
In the written evidence on
the above-mentioned instances of unauthorised expenditure, the Accounting
Officer confirmed that:
·
Services for the expenditure were
received to the satisfaction of the Department;
·
No individual benefited unduly from
such expenditure and control measures are in place to prevent this from
recurring.
Recommendation
In light of the above, SCOPA recommends that Parliament approve the amount of
R139,052 849.71.
Report to be considered.
11. Thirteenth Report of the Standing Committee on Public
Accounts on the Consideration of the Approval of the Unauthorised
Expenditure incurred by the Department of Trade and Industry, dated 29 January
2008
The Committee considered unauthorized expenditure relating to previous years.
It also considered evidence of the following unauthorized expenditure totaling
R 32, 246, 285.72 that arose owing to overspending on programmes and losses, and reports as follows:
1. During the 2003/04 financial year, an amount of R 32, 246, 285.72 in
unauthorized expenditure consisted of:
2. R 14, 185, 849.88 related to the
Department’s appeal against a judgment, but the appeal was dismissed with costs
and interest was also paid;
R 11, 456, 455.06 related to losses
incurred due to ruling of the high court cases against the DTI;
3. R6,375, 000.00 was reached in terms of Rule 34 of the Rules of the High
Court;
4. R228, 980.78 was attributed to Shurlock, which was
registered as an exporter in terms of general export incentive scheme (GEIS)
and was entitled to payment under the scheme in respect of export by company. Shurlock submitted a GEIS claim which the DTI did not pay.
The matter went to trial and DTI pay claim with interest.
In written evidence on the above instances of unauthorized expenditure, the
Accounting Officer confirmed that:
a.
No
individual benefited unduly from such expenditure; and
b.
Control
measures are now in place to prevent this from recurring.
Recommendation
In light of the above,
the Committee recommends that Parliament approves the total amount of R 32,
246,285.72 relating to the 2003/04 financial years.
Report to be considered.
12. Fourteenth Report of the Standing
Committee on Public Accounts on the Consideration of the Approval of the Unauthorised Expenditure incurred by the Department of Public
Works, dated 29 January 2008
The Committee considered unauthorized
expenditure relating to previous years. It also considered evidence of the following
unauthorized expenditure totaling R 299, 218,429.94 that arose owing to
overspending on programmes and losses, and reports as
follows:
5. During the 2001/02 financial year, an amount of R 41, 770, 429. 94
represented unauthorized expenditure. That amount consisted of:
R 32, 738,000.00 related to inadequate budget allocation received for thelease obligations of the National Government ; and
R 9,032, 429.94 related to overspending on losses approved for write-off for which
there were no funds available.
Recommendation
1.3. In light of
the above, the Committee recommends that:
i. Parliament
approves the total amount of R 41,770,429.94 relating to the 2001/02 financial
years.
ii. The Accounting Officer recovers
the losses in terms of Treasury Regulations 12 or finance the write off
relating to losses from savings.
6. During the 2002/03 financial year, an amount of R 227, 088, 000.00 was
incurred due to amongst other things; lease not adequately funded, improving
capacity of municipality, damages and losses, and criminal acts and justice
claims.
7. During the 2003/04 financial year, an unauthorized expenditure amounting to
R 30, 360, 000.00 was incurred due overspending on capital and maintenance
budgets and more significant over-expenditure on its property rates and
municipal services budget.
The Accounting Officer confirmed that:
a.
Services
for the expenditure were received to the satisfaction of the Department;
b.
No
individual benefited unduly from such expenditure;
c.
Control
measures were in place to prevent this from reoccurring.
Recommendation
Having considered the evidence and the steps taken by the Accounting Officer to
prevent similar cases of unauthorized expenditure from recurring, the Committee
recommends the approval of the amount of R 257, 448, 000.00 by Parliament.
Report to be considered.