This is according to the Auditor-General (AG’s) report into the department’s financials for the 2019-2020 financial year ending March.
During a briefing to Parliament on Tuesday, the AG’s officials reported that the department’s finances remain an ongoing concern.
The report read: “The debtors’ impairment provision as a percentage of accrued departmental revenue is high and has increased from the prior year for DHA. This is an indication that the department is experiencing challenges in the collection of outstanding amounts due to the state.
“Claims against the department are too high. If claims against the department as at year end become payable in the next financial year, there will be little left to fund operations and service delivery.
“Therefore, this may compromise service delivery and result in cash flow problems for the department.”
But Home Affairs Minister Aaron Motsoaledi told MPs there were court matters against the department which had withered away.
“Most of these court cases are not removed from the court roll and then the AG finds it there. Our legal team must go to the courts and have it removed,” he said.
He also said in one instance there was a court case for a claim of about R600 million against the department, but that it was successfully appealed.
In its report, the AG raised concern about the department’s irregular expenditure which increased dramatically from R28 million in 2018-2019 to R284 million in 2019-2020.
According to the AG’s report, R12 million represented irregular expenditure incurred in the current year. The remaining R272 million accounted for irregular expenditure incurred in the prior year, but confirmed in the current year.
The AG also made findings in respect of supply chain and contract management. It found:
- Awards made to a close family member of an official of the department.
- Unfair and uncompetitive procurement processes.
- Inadequate contract management.
“Management does not adequately ensure that compliance with application legislation is complied with. Action plans are not effectively addressing repeat findings.
“Management does not respond with the required urgency to our messages about addressing risks and improving internal controls.
“Reviews performed on the financial statements are inadequate to detect and correct material errors. Action plans are not effectively addressing repeat findings,” the report read.
The AG also noted that non-compliance with legislation remained a challenge, especially in supply chain management, “which led to increased irregular expenditure”.
“There is a continued struggle to prepare and submit quality financial statements.
“Non-compliance relating to material adjustments made to the annual financial statements remains a concern and management should implement the necessary controls and checks in place to ensure that annual financial statements prepared are of a good quality,” the report read.
In July, News24 reported on the department’s budget cuts of around R500 million.
Finance Minister Tito Mboweni tabled an adjustment budget to fund the government’s response to the Covid-19 pandemic which saw several government departments and entities having to slash budgets.
The department was instructed to “bring back R562 million to Treasury”.
DHA’s chief financial officer Gordan Hollamby said: “We are dealing with the risk and assurance levels. We commit to improving our financials.
“We plan well, but not always execute well. We have applied consequence management and take action where needed.”