ATC100824: Report on Auditor-General on the 2008/09 financial statements of the Council for the Built Environment

Public Accounts (SCOPA)

Sixth Report of the Standing Committee on Public Accounts on the Report of the Auditor-General on the 2008/09 financial statements of theCouncil for the Built Environment, dated 24 August 2010

 

Introduction

 

The Standing Committee on Public Accounts (the Committee), heard evidence on and considered the contents of the Annual Report and the Report of the Auditor-General on the 2008/09 financial statements of the Council for the Built Environment. The Committee noted the disclaimed audit opinion, highlighted areas which required urgent attention of the Accounting Authority, and reports as follows:

 

1.       Governance Issues

 

The Auditor-General reported that:

       The Internal Audit function was outsourced to Pricewaterhouse Coopers during the 2008/09 year and has subsequently been outsourced to SEMA Integrated Risk Solutions.

 

The Committee recommends that the Accounting Officer ensures that:

       The Audit Committee oversees controls to enable the organisation to have sufficient and trained employees to fulfil these functions in-house.

                                        

2.        Irregular, Fruitless and Wasteful Expenditure

 

The Auditor-General reported the following:

 

a)       Penalties and interest amounting to R11 239 were incurred during the 2008/09 financial year due to the late payment of taxes to the South African Revenue Service (SARS).  A further penalty of R139 792 was levied by SARS after year-end in respect of the late submission of the IRP5 reconciliation.     

b)       Further, during the 2008/09 year, a settlement amount was obtained from a finance company and paid over to settle outstanding amounts due in accordance with a lease agreement in respect of a photocopier. The total of the remaining lease payments amounted to R48 061 and the total of the settlement payments amounted to R55 883.  The difference of R7 822 is expenditure that could have been avoided had reasonable care been taken and therefore constitutes fruitless and wasteful expenditure.

 

The Committee recommends that the Accounting Officer ensures that:

a)       Strict rules and regulations are implemented to prevent irregularities and that disciplinary steps are  taken against those who do not follow recognised prescripts;

b)       The effectiveness of internal control is strictly monitored and supervised;

c)       Internal control deficiencies are identified and communicated timely; and

d)       Corrective action against employees who fail to perform their duties is taken.

 

3.       Trade Receivables

 

The Auditor-General reported that:

         Sufficient appropriate audit evidence could not be obtained to confirm membership   fee income and trade receivables contained in the comparatives; and trade receivable balances in the current year. 

The Committee recommends that the Accounting Officer ensures that:

            Proper processes are implemented to ensure accuracy, occurrence and completeness of calculations and income received by the entity.

 

4.        Non-compliance with matters affecting the entity

 

The Auditor-General reported the following:

a)       Significant difficulties during the audit concerning delays or non-availability of requested information;

b)       Deficiencies in design and implementation of internal controls in respect of financial and risk management and compliance with applicable laws and regulations and information systems not appropriate to facilitate preparation of financial statements;

c)       Prior year audit findings not substantially addressed;

d)       Late submission of strategic plan and budget; and

e)       Inadequate reporting on perfomance indicators.

 

The Committee recommends that the Accounting Officer ensures that:

a)       An environment where senior leadership ensures proper monitoring and oversight is created;

b)       There is effective monitoring of basic controls, processes and reconciliations throughout the year; and

c)       Controls in respect of deficiencies in risk management and compliance with laws and regulations are designed and implemented.

 

5.       Conclusion

 

The Committee further recommends that the Executive Authority submits a progress report on the implementation of all the above recommendations to the National Assembly within 60 days of the adoption of this report by the House.

 

Report to be considered.