POLOKWANE – Irregular expenditure amounting to R31,6 million was incurred by the Department of Public Works, Roads and Infrastructure as the result of payments made in contravention of the supply chain management (SCM) regulations.
The Auditor-General (AG) reported that effective steps were not taken to prevent the irregular expenditure. The matter was a recurring matter from the 2015/16 financial year.
According to information tabled by the department before the Standing Committee on Public Accounts (Scopa) last Thursday, an amount of R21,307 million originated from multi-year contracts signed by the Section 100(1) (b) Administrator, who did not follow SCM processes during the 2014/15 financial year.
The R21,307 million was included in an amount of R76,614 million that was written off during the 2016/17 financial year, having being condoned by Treasury.
Three contracts were closed by the administrator and out of these, two have expired. The last contract is ending on 31 March 2018.
These contracts, all closed on 3 September 2014, comprised a R5,8 million contract extension, closed with PWC and Sekela Xabiso, a contract extension worth R40,883 million with Ernst and Young Advisory Services and a contract extension with Microzone worth R25,589 million.
The department continues to declare these amounts as irregular expenditure.
An amount of R10,283 million was discovered during the 2016/17 audit and this was incurred due to non-compliance to SCM prescripts. An investigation is underway in the department to identify the root causes and the responsible officials in the department. The outcomes will determine action taken against responsible officials.
A service provider has been appointed for the advertisement of 10 contract posts for demand and acquisition management vacancies approved by Treasury in the department for the immediate and short term. Bursaries for various financial, management and supply chain management courses have also been provided to ensure the department has a pool of supply chain management officials.
The department materially underspent its budget by a total of R105,680 million.
The AG also identified contingent liabilities of R355,532 million was understated by R59,671 million.
Many of the department’s targets’ reported achievements could not be verified by the AG as the office was unable to obtain sufficient appropriate audit evidence for the reported targets.
Targets were also changed without required Treasury approval and some reported achievements were misstated as evidence provided did not agree with reported achievements. The method for calculation of some planned indicators were not clearly defined and the department’s assets were in a mess.
The AG stated the department’s accounting officer did not exercise adequate oversight responsibility regarding financial and performance reporting and compliance and related internal controls.
The department did not prepare regular, accurate and complete financial and performance reports, supported and evidenced by reliable information and there was inadequate review and monitoring of compliance with applicable laws and regulations.
