Treasury 2020/21 Annual Report; with Deputy Minister

Meeting report

The Chairperson said that the meeting was starting late – Members had attended a long plenary session, and some of them, including him, were experiencing loadshedding. He welcomed attendees.

The Committee noted an apology from Mr W Wessels (FF+).

The Chairperson said that he had also received an apology from the Minister of Finance, who was unable to attend due to personal circumstances. He thought that the reason for the Minister’s absence was that he was unwell, as the Committee had been told in its meeting with the National Treasury the day before. 

Treasury briefing: 2020/21 annual report
Introductory remarks by the Deputy Minister

Dr David Masondo, Deputy Minister of Finance, said that, like previous years, 2020/21 had been an extremely challenging year for Treasury. However, Treasury had “tenaciously” continued to deliver on its ambitious annual performance plan, despite the precarious economic conditions and difficult operating environment. It had tried its best to carry out its challenging, wide-ranging and multi-disciplinary mandate, ensuring the prudent management of public resources and the development of pro-growth economic policies. During the COVID-19 pandemic, Treasury had not only supported livelihoods and the public health response, but had also attended to the national Economic Reconstruction and Recovery Plan, supported vital economic reforms, and advanced economic transformation. Measures included realigning the composition of spending away from consumption and towards investment, and efforts to lower the cost of doing business in South Africa through Operation Vulindlela. He thought that all attendees would agree that this period had arguably been the most challenging period in South Africa’s post-apartheid history. To reach democratic consensus on the country’s future national economic agenda, honest debate and discussion was needed.

He said that Treasury’s overall audit outcomes had remained the same in 2020/21 – it had received an unqualified audit with findings. It had achieved 88.3% of its performance targets, and its annual expenditure had amounted to 99% of its total budget. The Director-General and Treasury team should be commended on this “outstanding” performance, and Treasury was committed to addressing areas of weakness.

Introductory remarks by the Director-General

Mr Dondo Mogajane, Director-General, Treasury, said that he was also experiencing loadshedding and was having occasional internet connectivity problems.

The Chairperson light-heartedly asked where Mr Mogajane was – the video picture was very clear.

Mr Mogajane replied that he was in Pretoria. He apologised to the Committee for the absence of Treasury senior management from the 9 November meeting about the audit outcomes of Treasury and its entities. Only inexorable external circumstances could have prevented senior management from attending such an important meeting. As explained in the letter of apology sent to the Committee, senior managers had been busy finalising the medium-term budget policy statement (MTBPS), which had been tabled later in the same week. However, he had personally received a full report from Treasury officials who had attended the meeting, and he would begin his briefing with the audit outcomes, in order to take seriously the issues that the Committee had raised during that meeting. 

Audit outcomes: overview

He said that Treasury had received an unqualified audit opinion, with emphasis of matter paragraphs. There had been no material findings in relation to its performance reporting, and improvements had been noted in supply chain management, ICT, risk management, and the audit committee. However, the following areas required strengthening:
· Annual financial statements (contained material misstatements);
· Fruitless and wasteful expenditure (R67 million incurred); and
· Irregular expenditure (closing balance of R300 million, a reduction of R88 million from 2019/20).

The fruitless and wasteful expenditure had been incurred primarily for technical support maintenance of software licenses for the Integrated Financial Management System (IFMS). This finding had been “expected” – it was part of a “contestation” between the Auditor-General and Treasury which had been ongoing for some years. Treasury had provided a detailed response to the material irregularity notice, and it would continue to engage with the Auditor-General. In the meantime, it had obtained legal advice and would take the finding through the objection process. The matter predated Mr Mogajane’s own term as Director-General, but he agreed with the approach his predecessor had taken. 

Mr Mogajane provided an update on the consequence management processes undertaken in respect of the cases of irregular expenditure. He added that Treasury took consequence management action on all such cases, but sometimes the process – especially the investigation – took a long time. As he had told the Committee last year, he believed that Treasury had to ensure that it applied the audi alteram partem principle and followed due process.

Audit outcomes: IFMS

Responding to issues raised in the 9 November meeting, he said that there had been progress on IFMS, though the progress had not been as rapid as he would have liked. There had been delays in the procurement processes. The bid for phase 2B of the project had been cancelled, because the proposed price far exceeded the budgeted amount and Treasury wanted to ensure value for money. The bid for a panel of system implementers for the national roll-out, under phase 3, had also been cancelled, at the recommendation of the bid adjudication committee. Treasury was taking special care because it did not want to err in implementing the IFMS project.  

However, there had been progress on the project’s governance issues. For example, the Department of Telecommunications and Postal Services (DTPS) and the Department of Public Service and Administration (DPSA) had joined the governance structures, which meant that the State Information Technology Agency (SITA), under DTPS, was now participating in the project’s operational structures. He chaired the steering committee, which met on a regular basis, and he thought the improvements in governance would lead to progress in many areas – the biggest remaining obstacle was the procurement challenges.

Explaining Treasury’s reasons for contesting the Auditor-General’s finding of fruitless and wasteful expenditure on the license technical support for IFMS, Mr Mogajane said that the license technical support was in use, despite “loose comments” to the contrary from certain parties. He argued that it would have been “irresponsible” not to renew the technical support, especially because establishing the contract at the outset had allowed Treasury to secure a significant discount and to avoid punitive non-renewal costs. 

On consequence management, he said that Treasury was fully cooperating with all IFMS-related investigations, which had involved the Public Protector, the Special Investigating Unit (SIU), the Hawks, and the Zondo Commission. Treasury had also done its own forensic investigation, the report of which had been provided to the Committee of the previous Parliament. Disciplinary action had been recommended in respect of four officials, although he emphasised that no Treasury official had been implicated in corruption. Treasury expected the SIU investigation to be finalised around the end of November, and the SIU would indicate whether recovery from any company or individual was warranted. Treasury would respond in accordance with the SIU’s recommendations.

He concluded that the IFMS processes had been long, tedious, and difficult, but it was an important project and Treasury intended to “steam ahead” on its implementation.

Audit outcomes: Audit action plan monitoring

Mr Mogajane provided an overview of the audit action plan monitoring framework, including the action plan steering committee, the internal audit unit, and additional controls that had been implemented. In 2020/21, Treasury had achieved a year-on-year reduction of repeat audit findings. As of September 2021, 19 (49%) of the 39 audit findings had been resolved, and a further 13 (33%) were in progress.

Human resources

At Treasury, 902 of 1 078 funded posts were filled, for a vacancy rate of 16.3%. Of the 176 vacancies, 49 were in senior management, and recruitment for 41 of those was currently underway. One reason for the high vacancy rate was adjustments to Treasury’s long-term employee compensation costs – like all departments, Treasury faced budget cuts, and was now compelled to prioritise critical skills. Another factor was delays in advertising vacancies, due to directives issued by DPSA in 2020 which had amended the normal process.

Oversight of finance portfolio

Mr Mogajane discussed the technical support that Treasury provided to the Minister in his oversight of other public entities, outlining the performance of those entities in 2020/21. He added particular detail on the Land Bank because, although the Land Bank reported directly to the Committee, Members had raised concerns about it in the 9 November meeting.

Annual performance

Ms Laura Mseme, Chief Director: Strategic Planning, Monitoring and Evaluation, National Treasury, said that Treasury had achieved 53 (88.3%) of its 60 annual performance targets. Eight of its 12 business units had achieved 100% of its targets. Those which had not were:
· Intergovernmental Relations (achieved six of seven targets);
· Jobs Fund (achieved six of seven targets);
· Office of the Chief Procurement Officer (achieved three of five targets); and
· Office of the Accountant General (achieved four of seven targets).

The following targets were not fully achieved in Programme 3, Public Finance and Budget Management:
· 36 infrastructure plans assessment reports produced (achieved 35); and
· R5.78 billion in cumulative grant funding disbursed (achieved R5.69 billion).

The following targets were not fully achieved in Programme 5, Financial Accounting and Supply Chain Management Systems:
· 95 governance reports produced (achieved 48);
· 28 public finance management capacity development programmes progress reports produced (achieved 18);
· Implementation of the strategic sourcing opportunities plan (achieved 59%);
· Four quarterly compliance reports produced (achieved one); and
· Execution of Common Design and procurement of supporting services.

Ms Mseme also discussed the activities and achievements of each programme.

Financial performance

In 2020/21, Treasury had spent R34.1 billion of its R34.5 billion appropriation, for underspending of R445.9 million (1.3%). The bulk of the underspending was in goods and services (R175.6 million) and transfers and subsidises (R165.4 million). She discussed the reasons for underspending in each category, which included – as in the previous financial year – delays in the IFMS project and lower-than-expected post-retirement medical benefits.

Discussion
The Chairperson said that while he was opening the meeting, he had not acknowledged by name the Auditor-General or the South African Revenue Service (SARS), who were present. He apologised for that – these were important independent offices which should be afforded the appropriate respect.

Dr D George (DA) said that Treasury had incurred a significant amount of irregular expenditure, and asked about consequence management in respect of those transactions. How many Treasury officials had been dismissed, or subject to criminal action, because of the irregularities?

Mr Mogajane replied that the transactions did not involve, for example, officials stealing money. Treasury was not currently dealing with any criminal actions of that kind. However, that did not mean that the irregularities were not wrong. The problems were things like non-compliance with prescripts, or not keeping records and making them available as required. The details of the irregular expenditure and fruitless and wasteful expenditure were in the report.

Dr George said that according to the government website, the Government Printing Works was “currently experiencing technical difficulties in publishing the Tender Bulletin.” Back in February, Treasury had issued an instruction that the eTender Publication Portal should be used in the interim. What was going on with the Tender Bulletin?

Ms Mseme replied that the Tender Bulletin was run by the Government Printing Works. Treasury was equally concerned whenever any such informational platform was not fully operational. However, it took comfort in the fact that it had the eTender platform running in parallel, to ensure that information about tenders was available and accessible. eTender was operational and was used by all organs of state – both the Tender Bulletin and eTender were used to advertise tenders, with the difference being that eTender was electronic rather than hard copy. The eTender Publication Portal could be used while the issues with the Tender Bulletin were being resolved.

Dr George said that he was receiving queries from people who had not received their benefits from the Government Pensions Administration Agency (GPAA), or who had experienced other problems or delays. He had recently escalated several of those queries, but the fact that the individuals had had to contact him to get help clearly indicated that there was some problem with the administration of the GPAA funds. Was Treasury aware of any such problems? If so, what was Treasury doing about it? The disbursal of government pensions was a fundamental service, so he thought it was very important under Treasury’s strategic objectives.

Mr Mogajane replied that Treasury officials received the same calls – he received so many complaints about GPAA’s performance and the processing of pensions that he had Shahid Khan, the acting Chief Executive Officer of GPAA, “on [his] speed dial.” The complaints did suggest that there was a problem at GPAA. The systems had to be streamlined. People complained that they called the GPAA telephone line continuously without anybody picking up. When he intervened directly on the basis of a specific complaint, he found that the problems were addressed, but that should not be necessary. An agency like GPAA should have its systems and processes in place. There was no reason why queries should take too long once you had the individual’s ID number and pension fund number – his tax status could be ascertained quickly. Such systems were automated these days, and technology had to be used efficiently. Treasury would look into the details and could report back to the Committee on the steps it took.

Mr G Skosana (ANC) said that it was very good that Treasury had achieved 88.3% of its performance targets. However, the Auditor-General’s report was worrying. The audit opinion had remained unchanged, he thought for the third consecutive year. Treasury had received an unqualified audit with emphasis of matter paragraphs. That was not a terrible audit opinion, but it was not that good either, especially for Treasury. Treasury was supposed to be a custodian of good governance, financial management, and proper internal controls, and it was responsible for monitoring and propagating those standards among other state entities. The Committee obviously did not expect anything less than a clean audit from Treasury. It would be very difficult for Treasury to convince other entities to get a clean audit when it could not even get one itself. The audit report was thus a matter of concern, and he did not think that this was the first time that the Committee was raising it – in fact, he thought it had been mentioned in the Committee’s 2019/20 budget review and recommendations report (BRRR). It was very important that Treasury should attend to this.

Also on audit outcomes, the Chairperson said that it was important for the Committee to acknowledge and commend the entities which had achieved clean audits. It was commendable that government officials managed to perform to such a high standard while working under very difficult circumstances. He asked Deputy Minister Masondo to convey the Committee’s gratitude to the relevant entities. However, the Auditor-General’s report did raise challenges. Some of the audited entities, Treasury among them, had struggled with legislative compliance and audit action plans. As Mr Skosana had said, Treasury was supposed to “lead by example.” Treasury was unique among government departments. It was directly established by the Constitution – it was perhaps the only department that was mentioned by name and given original powers in the Constitution. That had been done for a reason. For Treasury to “struggle with” legislative compliance was “a cause for concern,” and something had to be done. The audit report also raised concerns about SARS, GPAA, the Financial and Fiscal Commission, the Public Investment Corporation, the Cooperative Banks Development Agency, and the Government Technical and Advisory Centre. Mr Mogajane had mentioned the audit action plans, but the audit had revealed that some of the audit action plans were not effective. Consequence management had improved, but there were still entities under Treasury which were “lagging behind” on consequence management and legislative compliance. He did not think it was acceptable for entities to have findings on legislative compliance. Why should state entities violate the country’s laws, and without facing consequences? It was unacceptable.

Mr Mogajane agreed. He was happy that most of Treasury’s senior managers – except for those who were meeting with the Standing Committee on Public Accounts on deviations and expansions – were present in the meeting to hear the Chairperson’s remarks. Treasury could not find itself in any way “on the wrong side” of an audit report, because, as Mr Skosana had said, Treasury should be “exemplary.” It was at a lower level, in the business units and divisions, that non-compliance and irregularities occurred. He agreed that it was a cause for concern. Even when Treasury found itself in complex and difficult situations, it was unacceptable for it to be non-compliant with its own rules and regulations.  

However, he said that the contestation with the Auditor-General about the IFMS contract was a matter of “principles” and “interpretation.” He knew that the Public Audit Act emphasised his own role and responsibilities as accounting officer, but he was committed on a matter of principle to contesting the Auditor’s General finding of a material irregularity in the IFMS procurement. He was even prepared to go to court to argue for this principle. Treasury and the Auditor-General obviously had to come to some kind of agreement and understanding, but that had not happened yet. They would continue to “grapple” with it. In his briefing, he had listed the implications of not renewing the relevant IFMS contracts. Treasury could provide records to elucidate why the former Director-General had chosen to acquire the licenses. Mr Mogajane often asked the Auditor-General what the former Director-General should have done in his situation, if not act to secure more than R400 million in savings to the state. The former Director-General had “made a call,” which accounting officers had to do all the time. Sometimes the calls turned out to have been right, and sometimes they did not, but the accounting officers should be judged fairly for having made them. He did not want to become “emotional” about the issue, but it had been a matter of contestation with the Auditor-General for many years, and it created a public perception that there was something “untoward” about Treasury’s conduct in respect of IFMS.

He concluded that Treasury would have to cautiously object to the Auditor-General’s finding on IFMS, and would continue to engage until the dispute was addressed. To Mr Skosana’s congratulations on Treasury’s 88.3% performance rate, he said that 88.3% was not good enough – Treasury should have a 100% performance rate and a clean audit. It would work towards these goals continuously and improve over time.

Deputy Minister Masondo added that the Ministry and Treasury acknowledged Members’ point that Treasury should do its best in terms of compliance and performance. Indeed, it was already trying its best, including on finding a solution on the IFMS matter. The Ministry would convey the Committee’s gratitude to the best-performing entities in the “finance family” – it was also appreciative and proud of those entities. 
 
Mr Skosana acknowledged that Mr Mogajane had said that there were matters of contestation between the Auditor-General and Treasury on certain audit findings. However, what measures was Treasury putting in place to avoid receiving the same audit findings in the current financial year? How was it dealing with the audit findings to ensure that it could receive a clean audit in the future? Perhaps Treasury could provide the Committee with a comprehensive response on all the matters raised by the Auditor-General, including in the emphasis of matter paragraphs. Then the Committee would be better placed to evaluate the matters that Treasury was contesting, as well as to evaluate whether Treasury would be able to obtain a better opinion in the next audit. Moreover, he knew that Treasury had an audit action plan – he thought that there was such a plan every year – but perhaps the Committee could assist and monitor Treasury’s progress. Treasury could submit a quarterly progress report on its audit action plan. That way, the Committee would participate in the process throughout the year, instead of coming in only at the end of the year to “criticise” Treasury.

Mr Mogajane welcomed Mr Skosana’s “challenge” for Treasury to submit quarterly reports on its implementation of the audit action plan. He welcomed oversight by any parliamentary Committee. In other areas, when Treasury engaged with government bodies about efficiency and accountability in public finance management, it called for those bodies – whether they were provincial, municipal, or national – to hold it accountable. He thought that submitting quarterly progress reports would keep Treasury in check throughout the year.

On measures that Treasury had taken to address audit findings, Ms Mseme said that the audit action plan was one key instrument, as Mr Mogajane had said. However, even more important was the audit action plans steering committee, which reported directly to Mr Mogajane. Those responsible for audit findings presented to the steering committee on their progress in addressing the findings. The internal audit unit then verified their claims about the progress they had made. This mechanism was largely responsible for the reduction in Treasury’s repeat audit findings. The steering committee was starting to “find traction” and to have an impact. Treasury expected it to have a far greater impact in the future. As well as addressing repeat audit findings, it would embed the lessons of the audits into the organisation, identifying areas that seemed to have frequent weaknesses and resolving the root causes of the weaknesses, in order to pre-empt new findings in those areas. To improve the quality of its financial reporting, Treasury had established additional quality assurance processes. The internal audit unit would verify all financial statements, so that any challenges could be identified and addressed before the statements were submitted to the Auditor-General. Treasury was also bringing in additional capacity to assist in compiling the financial statements, so that it could address some of the areas in which it had made avoidable errors.

Mr Skosana noted that Mr Mogajane had said that some Treasury officials were under investigation or undergoing disciplinary processes. How long had those investigations or processes been ongoing, and when would they be concluded?

Mr Mogajane replied that unfortunately disciplinary processes were not simple. They were naturally legalistic processes, and their progress was also affected by the availability of the committee chairs and witnesses – if somebody said he was ill or otherwise unavailable, it was impossible to avoid postponements. So he could not provide a date for the conclusion of the processes that were currently ongoing. Most of them were chaired independently, by people from outside Treasury, and he would call for their timely completion.

The Chairperson asked about the “marriage” between the IFMS and Treasury. What was that relationship all about? According to the Auditor-General, Treasury had extended the IFMS contract to 2026, despite the serious challenges in the past. Why? IFMS was a longstanding problem. Past Committee reports showed that the Committee had raised serious issues around IFMS even under previous administrations of Parliament. The Auditor-General’s report from the year under review also raised critical issues. The Committee had to hear Treasury’s rationale for extending the contract and continuing its “marriage” to IFMS. Was there something that the Committee and the public did not know which made it difficult for Treasury to sever its relationship with IFMS? The Committee had to understand the challenges that Treasury was facing.

Mr Mogajane replied that IFMS was a project Treasury was pursuing – it was an IT system, like the Personnel and Salary System (Persal) and others. IFMS would integrate all the legacy IT systems, which were based on outdated platforms, in order to improve reporting and accountability by departments and modernise the financial management of government. He proposed that the Committee and Treasury should have a dedicated meeting on IFMS, involving other stakeholders such as SITA and DPSA. There were several misconceptions around IFMS, and, if left unaddressed, those could drag Treasury and the government “into the mud.” At a dedicated meeting, Treasury could explain the matter to the Committee and openly explain its thinking. Treasury’s position was that the IFMS project should not be terminated without proper consideration of the costs and implications of doing so. As accounting officer, he was “not necessarily married to” IFMS or to Treasury’s current approach to it. He was listening to the advice of experts. The implementation of an IT system like IFMS was a “huge” and difficult endeavour. Moreover, any IT project was very complex and obviously needed to be staffed by highly skilled individuals. Treasury had “struggled” with the project at the beginning of his term as Director-General – at one point, he had had to halt the implementation of IFMS entirely, for eight months or so, in order to address the challenges. He would take responsibility for that – it was better to be blamed for suspending implementation than to waste money.

As he had mentioned during the briefing, the SIU, the Hawks, the Public Protector and the Zondo Commission were all already attending to any concerns that Members might have about corruption or any “untoward” conduct in respect of IFMS. Treasury was awaiting the reports of those investigations, although, as he had mentioned, it had also independently commissioned a forensic report. Those investigations could also be taken into account. He repeated his offer for Treasury to return to the Committee to provide a comprehensive briefing on IFMS. Other stakeholders could also attend, and Treasury could explain the governance arrangements and the roles played by each entity. It could also provide the minutes of the steering committee’s meetings, and the Committee could put the whole IFMS programme under scrutiny.

Ms Mseme added that, at the proposed meeting, Treasury could expand on its reasons for maintaining the contract (see slide 7). If the contract was not renewed, that would put the system at risk, because Treasury would have to roll-out using an older version of the licenses. It would also expose other departments’ IT systems to risk, because the security patches would be outdated. Moreover, non-renewal carried direct financial implications. Treasury would incur a punitive 150% reinstatement fee, which would itself be wasteful expenditure. It would also have to pay, at the point of utilisation, the maintenance and technical support fee that it had not paid for the period from the date of licensing to the date of utilisation.  

Deputy Minister Masondo agreed that Treasury and the Committee, along with other relevant departments and entities, should meet again to have a comprehensive and integrated discussion about IFMS. He suggested that the Auditor-General should also attend, if possible, even if only as an observer. The IFMS issue affected several departments, and the Auditor-General’s approach to it was quite important. At that meeting, Treasury could explain the project plan and strategy, and the nature of IFMS itself. Mr Mogajane oversaw the IFMS project, and there was a Chief Director assigned to manage it.

The Chairperson said that unless something “drastic” was done, the Land Bank would collapse. The Committee was very worried about it. Previous audit reports had flagged very serious issues. The Land Bank had received substantial bailouts, but those had yielded “minimal outcomes.” It had originally been located under what was now the Department of Agriculture, Land Reform and Rural Development (DALRRD) – he thought the President had signed a proclamation to relocate it to Treasury, under the expectation that the transfer would bring an improvement in its governance and management. But there had not been such an improvement. For example, the Bank’s 2020/21 audit was outstanding. What was Treasury doing? The Bank had been moved to Treasury precisely because it had been struggling under DALRRD, but the situation was deteriorating. The collapse of the Land Bank would cause serious problems in the agricultural sector and in the economy generally.

Mr Mogajane replied that, many years ago, Treasury had indeed taken over the Land Bank. For a while, Treasury had managed to turn it around, especially under Phakamani Hadebe, who had left Treasury to run it. Treasury’s role at the Land Bank was limited – the Bank had its own board and fiduciary responsibilities, and was responsible for developing and implementing its own strategy. The Bank’s board had to be held accountable. However, as soon as the Land Bank was ready, Treasury was prepared to engage with it and to outline various interventions.

Deputy Minister Masondo said that the Land Bank, its lenders, and Treasury were discussing the liability solution. Members would be aware of how the liability problem had arisen – the Bank had taken out short-term loans, with terms of about one year, but had made longer-term loans to commercial farmers, with terms of five years. There was a mismatch between the terms of the loans that the Bank took out from lenders and the terms of those that it granted to farmers. The Minister had made the Land Bank one of his priorities when he had taken office, and Deputy Minister Masondo thought that the Ministry would be able to report progress to the Committee in the future. He agreed with the Chairperson that the consequences of failing to find a solution would be “huge” – there were also cross-default implications, for example.

He suggested that Treasury and the Committee could meet specifically to discuss the Land Bank problems in more detail and with more focus. Depending on what the Chairperson thought appropriate, the Land Bank could be discussed at the same meeting as the IFMS or at an entirely separate meeting.

The Chairperson said that the Auditor-General’s reports were binding – it was mandatory to implement the Auditor-General’s recommendations. Part of the audit report included recommendations to Treasury itself. The first recommendation was to fill key executive management positions with appropriately skilled and experienced personnel. However, the Committee acknowledged the progress that Treasury was making in this regard. He had noted that Treasury had appointed several young black women to top management positions, which was commendable. The second recommendation was to develop and implement effective action plans to address audit findings. The third was to monitor performance and consequence management – although the Auditor-General acknowledged that there had been progress there, it emphasised that more should be done. Finally, the fourth recommendation was for Treasury to address the procurement delays and governance matters raised on the IFMS project.

He said that the Auditor-General had also made recommendations to the Committee as an oversight body. Above what the Committee did in the regular course of fulfilling its mandate, the Auditor-General said that it should monitor, and regularly follow up with, the executive authority and the accounting officer or authority – in this case, that was the Minister, the Director-General, and possibly the board of directors. First, the Auditor-General recommended that the Committee should monitor the entities’ progress on their audit action plans. Mr Mogajane had mentioned that Treasury and its entities all had audit action plans. The Chairperson requested that the plans should be sent to the Committee, so that Members would be better informed and, at the Committee’s next meeting with Treasury, would be able to hold Treasury accountable and “take it from there.” The Auditor-General’s other recommendations were for the Committee to monitor the filling of vacancies; monitor consequence management and governance matters raised on the IFMS project; and follow up with entities that incurred irregular expenditure and fruitless and wasteful expenditure to ensure that there was consequence management. So the Auditor-General was emphasising both the IFMS project and the consequence management issue – both were raised in more than one recommendation.

The Chairperson said that the Committee should meet with the Land Bank next year, and the meeting should take place at the Land Bank’s offices rather than virtually or in Cape Town. If the Bank collapsed, it would be “under [Members’] watch.” The public would ask what Parliament had done to prevent the collapse of this important state entity. It was not only Treasury who had a role to play – Members were also called upon, as public representatives, to help ensure that the Land Bank stayed “afloat.” After the budget speech in February, the Committee should meet at Land Bank – along with the Minister and the board – in order to get a clear explanation of what was happening and what should be done to prevent a collapse.  

He said that he did not know how IFMS operated or was implemented, and whether IFMS had a physical “home” somewhere. If it did, the Committee would visit the IFMS, in the same way that it planned to visit the Land Bank. That way, Treasury could show Members in simple terms how the system operated, what challenges there were, and how they were being addressed. Mr Mogajane had suggested that other entities such as SITA could attend the IFMS meeting, and the Committee would recruit Parliament’s IT division as “technical back-up” to help Members to understand the system – it was very complicated. He was familiar with some of the government IT systems, because he had worked in provincial and national government in the past, but he did not know how IFMS worked. Something had to be done to change the situation where lots of money was being spent and was “going down the drain.” The Auditor-General flagged the IFMS project annually. It had serious bearing that the Auditor-General had explicitly told Parliament to monitor this issue – if something went wrong with the IFMS project, the public would blame Parliament for failing to perform effective oversight even after it had been warned to do so by the Auditor-General.

Finally, the Chairperson told Mr Mogajane that Treasury should acknowledge the officials who worked hard and ensured that finance entities got clean audits. Not all government officials could be painted “with the same brush.” If officials deserved bonuses and incentives, they had to receive them. He knew that there were some accounting officers who denied bonuses or incentives to everybody on their staffs unless everybody performed well. That was wrong – it discouraged hardworking officials. Some of Treasury’s employees were young women with young children, but they were currently in this Committee meeting, at almost 9 p.m., because they were committed to serving the public. It was sometimes implied that the whole public service was corrupt and inefficient, but that perception was incorrect and should be “discouraged at all costs.” The state operated because there were public servants, police officers, and soldiers who spent “sleepless nights” ensuring that it did. Government should incentivise such people to perform at their best. Deputy Minister Masondo had said that he would convey the Committee’s commendation to the good work of the entities that had received a clean audit, and the Chairperson wanted Mr Mogajane to do the same. It was Mr Mogajane’s responsibility to incentivise the employees of Treasury and other finance entities. One should not criticise those who performed poorly – such as the Land Bank, amid its current difficulties – while remaining mute about those who had performed well.

The meeting was adjourned.