Auditor General South Africa capacitated the Committee on the mandate of the Auditor General, its prior limitations and the implications of the new powers given in the Public Audit Amendment Act which came into operation on 1 April 2019. These would give the AG ‘teeth’. The AG must report any material irregularity referred to a suitable public body for investigation; it must follow up that remedial action is implemented that the AG recommended for a material irregularity; if it has not been implemented, a certificate of debt may be issued against the accounting officer or authority for failure to act and implement the AG’s remedial action.
The amendments to the Act were needed due to the significant non-compliance and the lack of consequence management over the past ten years at national, provincial and municipal levels. Irregular expenditure has been increasing over the years at all levels of government due to the lack of consequence management.
Members asked about ministerial accountability; the role of the Portfolio Committee in holding the Administration and the Executive accountable; the implications of the expanded AG mandate; outcomes of the phase-in approach since April 1; role of the Executive Authority to ensure that internal controls were implemented in departments; and if the certificate of debt could be fast-tracked if compelling evidence of criminal activity was available. The Committee would be briefed on the 2018/19 audit on 9 October 2019.
NHI Bill provincial public hearings would start on 25 October with Mpumalanga and Northern Cape. Once those two provinces were complete, only then would a programme be devised for the other provinces. Request for an extension of the 11 October public submission deadline was still being considered but this would not halt the start of the provincial public hearings. Stakeholders would also be given an opportunity to make oral submissions in Parliament next year.
The Chairperson requested that due to time constraints AGSA should get straight to the point and touch on only the most important aspects of the presentation.
Auditor General of South Africa (AGSA) capacity building session
Mr Eugene de Haan, AGSA Deputy Business Executive, said that the Auditor General did not search for fraud when conducting its audits but it was obligated to report it if discovered. He touched on the root causes of continued poor audit outcomes which were slow or no response to the AG’s recommendations by management; incompetent or unstable people in key positions and the lack of consequence management.
AGSA considered its journey through the years, and the need for amendments was driven by concrete examples of how audits have been concluded over the past ten years at the national, provincial and municipal levels. There is a significant non-compliance and a lack of consequence management. Irregular expenditures have been increasing significantly over the years. There is clear evidence that audits were becoming a useless exercise. Things were not changing due to a lack of consequence management.
The extent to which there are indicators of possible abuse of public funds is something that was previously overlooked. The concept of 'material irregularity’ will allow the auditors to report on matters relating to abuse of public funds. The amendments encourage auditors to go deeper in looking at selected transactions, that appear suspicious.
According to the amended Act, once a recommendation on material irregularity has expired, it becomes a binding remedial action. There have been instances where some recommendations have been contested, but that is a normal exercise of one’s rights.
The concept of a certificate of debt is also introduced in the amended Public Audit Act. That certificate would be furnished to the accounting officer (director general) of the department or the accounting authority (board) of an entity if a material irregularity remains unaccounted for. The 'material irregularity' definition was explained as was the process for dealing with a material irregularity once identified.
Consequence management remains the role of those charged with oversight. Consequence management includes employing competent people in the right positions. It is not just about money.
The Chairperson said that slides 15 and 16 were critical because they outlined the causes of the challenges crippling the departments. However, the AG recommendations remain ignored. Members should pay attention to those issues so that the Committee can hold the Department to account on these matters. Slide 37 was fresh information that the AG shared with the Committee and Members needed to take note of it. He asked Members to limit clarity seeking questions due to time constraints.
Ms S Gwarube (DA) said that if Members were expected to perform their oversight role effectively, Members should be afforded adequate opportunity to ask questions.
The Chairperson indicated that he would allow Members to ask questions. He indicated that the Auditor General would be meeting the Committee on the first day of the next term and encouraged Members to ask questions then.
Ms E Wilson (DA) lamented that for the four weeks the Committee has been so busy that Members did not have sufficient time to engage with entities and stakeholders. Every opportunity that Members get to engage, they are either limited or circumvented from asking questions. This matter was to be raised at the Chief Whip’s Forum.
She referred to slide 32 and pointed out that a major concern was the Minister’s role in the accountability of the department. It would benefit Members if the AG would clarify the Minister’s role in holding the department or the accounting officer accountable. That links to the AG’s comment on oversight gaps – in particular the limited Committee resolutions and reports to the House to maximise impact. This was a serious gap and the AG should provide guidance to the Committee on this. The Committee receives the AG’s audit report in October and the Committee compiles its own report with recommendations and then it just ends there. From the AG’s point of view, what would it like the Committee to do to assist the AG in holding the Department and its entities, and its Accounting Officer and Minister accountable?
The Chairperson said he had explained to Members at the very beginning of the term that all Health entities would give an introductory briefing to the Committee on what it is they do and who they are. This was so Members were aware of the entities and what they do. He did not expect Members would have a list of questions at that stage only when they come back again. Members would have an opportunity to engage all entities as well as the Department again. The limitation for engagement and questions was deliberate because those sessions were intended to be introductory sessions – a meet and greet session.
Ms Gwarube referred to the expanded mandate of the AG which it had started implementing it on from 1 April as a phased-in approach. Have there been outcomes of the expanded mandate yet? Eight out of nine provincial health departments have adverse audit opinions almost annually. What is the role of the national department or the Executive Authority in ensuring internal audit mechanisms and a red flag system are implemented so that people are held accountable? Lastly, where there is compelling evidence of criminal activity; does the process have to take so long before the certificate of debt is issued? Under those circumstances, could the process be shortened?
Mr de Haan replied about the role of the Executive Authority. The PFMA make specific reference to the Director General as the Accounting Officer of the National Department and the Head of Department for the provincial department. That is why the Executive Authority would say that it is not his/her responsibility. However, the Executive Authority does have an oversight responsibility to ensure that governance structures were implemented. The role of the Executive Authority is to ensure oversight over the portfolio. Consequence management and misappropriation of funds are the Accounting Officer’s responsibility to follow up. The Committee would have to focus more on the Director General.
Mr de Haan replied about Committee resolutions. As a Committee you can make a resolution and forward it to the Accounting Officer to come and give feedback on the implementation of Committee recommendations. He recommended that the Committee should rely more on the PFMA in holding the Accounting Officer and Accounting Authority accountable. In addition, the Committee should ensure that the Department minimised the number of key people in acting positions.
Mr de Haan explained that the Director-General in the national department can only influence the HODs in the provinces; they cannot force the HoDs to perform certain duties or carry out certain tasks. The AG had started doing a Health Sector Report which would be presented to the Committee later. In the Health Sector Report the AG identified key focus areas across the board – national and provincial – and what money to follow for specific priorities. The only influence the national department has over the provincial department is through specific earmarked grants such as the conditional grants and the provincial share in the Division of Revenue Act (DORA). For other funds, the MECs or provincial ministers have autonomy. If you look at the MTSF and its requirements for Health, you must ensure that national and provincial are striving towards common goals.
The Chairperson asked AGSA when it returned on 9 October to summarise what it presented here as a refresher for Members.
NHI Bill public hearings programme
The Chairperson said that the provincial public hearings have been confirmed on the programme and would start on 25 October with Mpumalanga followed by Northern Cape. Only after those two public hearings have been held will the other provinces be considered. The Committee would then write to all political parties to inform them about the process which would unfold. The extension request for public submissions was still being considered but this would not halt the start of the provincial public hearings. Stakeholders would be given an opportunity to make oral submissions in Parliament as well next year.
The Committee agreed to the programme.
The Chairperson said that the Committee had received requests from stakeholders for an extension beyond the 11 October deadline for submissions. The Committee had replied and informed them that the request was receiving attention.
Ms Gwarube said that one had to have a sense of what the country was saying before the public hearings started and the timeline seemed quite tight. Logic dictates that by the time Members went to the public hearings on 25 October, they would not have seen the submissions beyond 11 October.
The Chairperson said a lot of submissions have come in, perhaps about 1000. It would be impossible to peruse all the submissions. Those that were not considered would be considered next year in March.
Mr T Munyai (ANC) agreed with the Chairperson that the Committee would not be able to consider all the submissions and the approach outlined by the Chairperson should prevail. Everyone would have an opportunity to be heard. He proposed that the Committee accept WhatsApp messages so that people were not limited. This had everything to do with the access to the internet.
The Chairperson welcomed the proposal and said that this had been raised and a team would be constituted separately for that platform.
Ms Vuyokazi Majalamba, Committee Secretary, agreed that she had received many submissions but not every stakeholder would come to make an oral presentation so that would not affect the dates that have already been set aside for public hearings. The stakeholders that have requested extensions are those that would come to the public hearings in Parliament next year after the provincial hearings. Therefore, even if the Committee were to extend, that would not affect the programme for the provincial hearings.
The meeting was adjourned.
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