Social Development Sector MTSF Audit Outcomes & Accountability Ecosystem: AGSA briefing

Meeting report

AGSA briefing on DSD audit outcomes

Ms Michelle Magerman, Business Executive, AGSA, led the presentation. She said they would go through the presentation and then allow time for clarification of any matters by the Members. The purpose was to ensure that the Committee understood how the AGSA functions.

Ms Madi Singo, Acting Business Executive, AGSA, started the presentation by stating that AGSA had a constitutional mandate as the supreme audit institution South Africa. It existed to strengthen the country’s democracy by enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence. AGSA was therefore there to assist the Committee in oversight.

She briefed the Committee on the Public Audit Act, pointing out that AGSA’s powers had been extended in 2019, with the Act giving it the power to address matters which were not being addressed by the accounting officers. This concept was known as material irregularities (MIs), and states that:

• The AG may refer any suspected material irregularity identified during an audit to a relevant public body for an investigation; and
• The AG had the power to take any remedial action and issue a certificate of debt where an accounting officer or authority had failed to comply with the remedial action.

Describing the AGSA's involvement with the Department of Social Development (DSD) over the past four years since 2019/20, it said its audit outcome findings had included the continuous use of leases without following procurement processes, unfair/uncompetitive procurement processes and payments made to ineligible beneficiaries. This had resulted in irregular, fruitless and wasteful expenditure, the overpayment of grants, and irrecoverable debts. The root causes had been inadequate oversight of the grants administration and payments done by the South African Social Security Agency (SASSA), and weaknesses in controls surrounding procurement processes.

The top contributors to annual irregular expenditure (IE) were SASSA, the DSD and the National Development Agency (NDA). A large portion of old cases of irregular expenditure at SASSA were finalised through condonations, clearance from irregular expenditure and removal by the accounting authority, in line with the requirements of the Public Finance Management Act (PFMA) compliance and reporting framework of 2022/23.

Of the R424 million irregular expenditure not dealt with at SASSA, there were two big cases. These were the R281 million Integrated Community Registration Outreach Programme (ICROP) investigation, which was still in progress, including the Public Protector investigation into the matter, and the R12 million communication contract, which was in the process of requesting condonation from National Treasury.

The achievement of medium-term strategic framework (MTSF) targets was reported in the annual performance reports, followed by oversight and then policy development.

The AGSA emphasised that performance planning and reporting had an impact on service delivery. The actual achievement reported for the percentage of enquiries resolved within the stipulated timeframes differed from the supporting evidence provided for audit, with the result that the accuracy of SASSA's reported achievement for that indicator could not be confirmed. This was due to SASSA not having a process to record and track grant enquiries received from the public, with the result that they could not accurately report resolved/unresolved cases. The Portfolio Committee should therefore continuously monitor the effectiveness of the accountability ecosystem within the entities to ensure that all role-players exercise their responsibilities and adequately report in a transparent manner.

The AGSA reported that the total national grant expenditure was R201.4 billion. The most expenditure across all grant types was in Kwa-Zulu Natal (KZN), with a total of R42.5 billion. The Department had spent 97.5% of the budgeted social assistance grants, which included underspending of R4 billion on social relief of distress (SRD) grants. The main reason for the underspending was the low up-take of the R350 grant following the lower income threshold and bank verification of applicants’ incomes.

The benefits administration and support programme administered by SASSA managed the full function of grant administration from application to approval and beneficiary maintenance.

Regarding material irregularities, all five SASSA MIs have been resolved to date. The auditees had recovered/withheld R144 million in financial losses. The responsible individuals had been identified and the disciplinary process was complete or in progress. Investigations had been instituted, and internal controls and processes were improved to prevent future recurrences.

Recommendations for Portfolio Committee:

• Closer monitoring to ensure that the MIs identified are adequately addressed
• Follow up on the progress of the development and implementation of the action plan to prevent a recurrence.

See attached for full presentation

Discussion

The Chairperson thanked AGSA for the presentation and noted that it was somewhat depressing, as the truth was made clear and required oversight, yet the oversight was inadequate. This meant the Portfolio Committee had not done what they were supposed to do. However, she appreciated that the lived experiences of people on the ground were included in the AGSA’s report. At the back of every unachieved key target were starving people and stunted children, because the money allocated to the Department had never reached them.

She asked for an explanation from AGSA as to how R316 million had filtered through the accountability ecosystem. Multiple mechanisms -- including the audit committee, the internal audit, and the extended role of the Auditor General -- were in place, yet R316 million was still able to filter through and was now reported as resolved. On the one hand, Cash Paymaster Services (CPS) had been paid but was not supposed to be, and on the other, there was a chief financial officer (CFO), chief executive officer (CEO) and other people through which this money was filtered towards the CPS. What was happening on the entities’ side that all of these controls were allowing this money to filter through?

She did not count the Portfolio Committee in the social development ecosystem. She asked what precedent was being set here, since, despite civil society’s legal action and all the noise that the Portfolio Committee had made in the past, consequence management had not kicked in. She noted how an official, guided by laws, presiding over the payment of millions to a company that did not deserve it, could lead to similar situations in the future as no consequences had been implemented. A simple legal opinion could resolve the matter, and the official could disappear.

She asked why they needed a legal opinion to do the work when they had the laws that empowered them to do it. She said that this was concerning, and she did not believe that these matters had been resolved.

She thanked AGSA for all the details in their report, as this allowed the Committee to fully understand the environment in which they were operating. She again emphasised her disbelief that the controls in place did not match the databases they use and the amount of money they were dealing with. What were they saying to the 30 million South Africans who were poor and hungry?

Mr T Munyai (ANC) said there was clearly corruption taking place, and there was no other word to describe SASSA. Clearly, there was no internal control taking place, and fraudulent criminals were preying on the money that was supposed to be going towards disadvantaged people. He noted that a new financial year had begun, and he did not agree with SASSA that these issues had been resolved. He wanted the issues to remain open, and urged the Committee to follow up. A joint meeting with law enforcement and the security cluster, such as the Special Investigating Unit (SIU) and the National Prosecuting Authority (NPA), must be held to address these critical issues. One could not allow payments to be made to the wrong people and for the CEO still to be at SASSA. He knew that to get rid of a public servant, a certain process had to be followed, but he did not agree that the issues of all these payments to ineligible applicants and alleged fraudulent grant payments were being resolved. One could not have all of these fraudulent activities within SASSA and then have nothing done about them.

How could one pay R300 million -- or even R100 -- to the wrong person? How could one pay the wrong supplier? If that was not corruption, then what was it? He urged the Committee not to close these matters and regard them as resolved until they had followed through with the joint security cluster and all law enforcement agencies. He thanked the AGSA for exposing these issues, and stressed the necessity for independent law enforcement to investigate them.

He said the culture shift of the Auditor General (AG) had involved all of this money that had been spent, and whether one could see an impact on the ground. From the material findings, the impacts were negative, so the culture shift of the AG did not have an impact on the people because of these fraudulent and corrupt activities.

He asked again for the cases to be reopened until they were satisfied as a Portfolio Committee. SASSA needed to show the Committee, from their own offices and books, how these issues had been allowed to happen. Who had pressed which button and who had approved what? The problem could be the key leader of that particular institution, as the leadership within the same institution had been questioned in the past.

He said the Committee must get letters from National Treasury, the Department of  Public Service and Administration (DPSA) and the Public Protector. They must have their own meeting with the SIU and the NPA to see how the poorest of the poor could have had their money taken. This was chaos. He reminded the attendees they had the right to call and subpoena anyone before the Committee. He said R270 billion goes towards SASSA, so the money was there, but the alleged corruption and fraud were also there, and they were affecting the most vulnerable people. If the people could not deal with the issues or turn around the institution, the Committee must turn the leadership around.

Ms M Makgato (ANC) said they were all different, but cared about the same things. She asked how the AGSA was going to help SASSA and the National Development Agency (NDA) to carry out their responsibilities, because everyone could see that SASSA was having problems. They could all see that things were going up and down.

She asked what the Department's aim was to assist the other provinces so they could also be on the same level as Kwazulu-Natal, as the difference in the grant allocations between KZN and the other provinces was too great.

Considering AGSA's recommendations for SASSA to follow through and ensure that leakages were stopped, it seemed something would be done, but nothing had been done. SASSA should explore integration with entities that would take care of assets and make sure that beneficiaries were checked before payments were made.

She called for closer monitoring by the Committee to adequately address SASSA's lack of action so that they could follow up on the progress of development and the implementation of action to prevent a recurrence.

Ms P Marais (EFF) said that this matter was really upsetting everyone, and SASSA was sitting there as if nothing was wrong. They had been there two weeks ago, and she had asked them in Gauteng how ten people could be suspended and then return a year later as if nothing had happened after being found guilty of fraudulent activity. How could one keep the accounting officer accountable if he did not comply? One could lay down all the prescriptions for what one must do, but how would one address that problem if they did not comply? What was the role of the AGSA in forcing this accounting officer to comply with what was expected of him?

She wanted to address procurement processes and the consequence management for dealing with irregular expenditure. She noted that R4 million had been written off; R561 million had been condoned and removed; and R444 million had not been dealt with. That was a big concern for her on page 10 of the presentation, with the material findings.

She asked how it could be right that R74 million had been paid for services not rendered. How could one give something to someone, but not get the services for it? There had also been R316 million overpayment for service providers. She commented that when one spoke to SASSA, people such as the CFO and CEO were just “acting,” and that no one was taking responsibility for these issues. One could resign and nothing would happen, and then go to the next department and do exactly the same thing because nothing had happened to one at SASSA. There was no accountability, and the departments were not talking to each other to say that this person was involved in fraudulent activities at SASSA, and now he was going to the NDA. From there, he could move to the Health Department. That was how they were moving around and doing the same things.

The people were suffering. They were sending her messages asking her how it was possible that their money was being paid to other people. People were still waiting for their money and sleeping hungry, but nothing was happening. Talking to SASSA was like speaking to someone where the information goes in through one ear and out the other. They were saying that these were clean audits, but they were not reaching their targets. If they were not hitting their targets, then one must not say that it was a clean audit and that they were reaching their targets.

She said that officials, such as the CEO and CFO, were travelling last year as if they were always on holiday. How could one keep them responsible, and why were those overseas trips necessary? Was it because it would impact their work -- like they would learn something, for example? What were the reasons for all the travelling, and how did it benefit SASSA? Did they travel abroad with their entourages because they had to spend their budget?

Ms D James (Action SA) said she believed the Members were all on the same page. She suggested that it was only in the DSD that one got paid legally and referred to it as ‘suspension,’ where one gets promoted to a higher rank after being found guilty of corruption, and where one exits and then return. These were the patterns that they were picking up. People who were implicated in corruption would exit the Department and return a step higher three months later in a different sphere of government. That was the current consequence management that was in place to deal with all of these findings.

She referred to the probe in Gauteng that had been launched into over 50 non-governmental organisations (NGOs) that had negatively impacted vulnerable people on the ground. Despite all of the reports, they still did not know why that probe had been launched. When they asked questions, they had been told that it was the decision of the AG. None of those NGOs had been given a reason as to why their funding was halted. There was no explanation or consequence management. Months later, funding had just carried on as normal, while in reality, so many lives had been affected during that period and so many organisations had to close. What had been the consequence management, and what was the recourse? Up until today, many organisations remained closed as a result of DSD stealing. Social Development officials were stealing and delaying funding, and the NGOs had to bear the brunt of what was happening internally.

She said they had also been told that 13 officials -- who remained anonymous and she was not sure why -- had been suspended, and they did not know why. She believed that three of them had been reinstated. No report on that suspension, which had impacted so many people, had been provided. Food banks had to close, and expired food had to be disposed of. That was the extent of that suspension.

The DSD was making a concerted effort to trend in the news. It had been found that almost half a billion rands of unspent funds had been returned to National Treasury, but whenever NGOs and communities say that they need funding, the Ministers say there is no money because National Treasury did not give them any money. And then, at the financial year-end, one would find dozens of imbizos happening.

This entire Department must be red-flagged. It could not continue like this. The Committee would like answers on the 13 suspended officials. How far was that investigation, and how could they be told that all 13 of those officials had been cleared after such a long time of investigation? She asked for a full report on the fraud and the allegations pertaining to the officials, and especially those in Gauteng. 

Ms S Frenchman (NCC) said that the Chairperson had reiterated what they all wanted to say, and that the term ‘legal opinion’ should be revisited, because it was an opinion and not the law.

She asked the AGSA if they audited only paperwork and documents, or if they went physically to see that company X received a tender but they were registered only last week to receive this tender. Did they actually go out to do these checks?

What did the AG do when a department was given a clean audit, and it comes out two years later that fraud and corruption had happened and arrests had been made? How did they then explain their clean audit? She gave an example of the recent arrests being made in the local human settlements portfolio in Cape Town. The City of Cape Town receives clean audits, but there were millions of rands that had gone missing. Who was auditing the AG?

Ms N Tafeni (EFF) referred to the insights on grant expenditure on page 17, and asked how much of their allocated grants each province spends. Regarding the R4 billion underspending of SRD grants, what was meant by "underspent?" Could they elaborate on what was meant by the reason being the low uptake of the SRD grants following the lower income threshold and bank verification of applicants’ incomes? Many people had complained about not having access to these grants due to their frustrations at SASSA. It appeared as if the under-expenditure from the DSD with regard to those grants was self-made and orchestrated as some sort of cost-saving mechanism. What was the role of the AGSA in this case, when there was an outcry from the public that they did not have access to these funds, yet the money ended up going back to National Treasury as ‘under-expenditure’?

Ms A Abrahams (DA) appreciated the Chairperson’s remarks regarding the CPS, as it was a longstanding issue in the social development environment. Regarding the CPS, she would like to know where the AG’s role stopped and where the public protector and SIU’s roles begin. Maybe it was time for those institutions to account for this, and for the SIU to provide clarity on where those roles begin. She also asked to what extent individuals could be held personally liable. She asked the AG if the R316 million included interest, and whether that was also part of the amount written off and condoned. She recalled them having to pay back with interest, so she would like to find out exactly what the amount was.

She said that in this report, they had largely focused on recurring issues in the CPS, and that the irregular payments had also been issues in the previous term. She understood that the AG had certain capacity limitations, and could look only into certain areas, so she would like to know how they could be sure that they were not missing other smaller amounts, since the focus was given only to certain larger amounts. The smaller amounts could accumulate into a bigger irregularity. The reports seemed to her to be focusing on the same areas.

She asked for a breakdown of what had been written off, condoned and not dealt with on page 11. She also asked for more information on the R281 million ICROP investigation, as she understood it was not a new programme within SASSA. Why was it not such a big issue in the past? What had they now done differently that had caused it to be flagged here?

She echoed the sentiments over the individuals in acting positions, and asked how an accounting officer could be held accountable in an acting role. They could also be held responsible in a personal capacity.

She was shocked to see on page 15 that SASSA did not have adequate report-keeping for enquiries. She asked how SASSA was recording all the enquiries they, as Committee Members, were sending them. At some point SASSA must be able to get back to them and say that they had received X number of enquiries from the Members. How were they properly followed up? The only way she knows her queries have been handled on SASSA’s side is when the individual stops phoning her or she stops following up with SASSA.

Her concern was how all the other individuals were following up on their enquiries. Telephone numbers did not work and were useless. The automatic response on their email states, "If you don’t get a response within a reasonable time, please escalate this matter." This leads to a gap because 'reasonable time' could be open to interpretation. She had heard that it refers to ten days, and she did not see how that could be such a big issue that they could not correct it. If they had an automated service, then the data had to be going somewhere, so it should be easy for SASSA to fix.

She noted that SASSA had said there was a budget problem regarding the inspectorate for the last seven years, as only R2 million was allocated to it, but also that they were looking to move the inspectorate out of SASSA and into the DSD because oversight needed applied to the bosses and their colleagues. Was this something that the AG supported as one of its recommendations?

Referring to slide 18 on grant payments, was the AG able to give a breakdown of the potential leakages and if there were individuals personally receiving those funds? Who were the people who had been double dipping, and who were the ineligible beneficiaries that were being paid?

She asked the DSD about the MI involving assets being acquired at prices higher than the market value referred to on pages 21 and 23 of the presentation, and to elaborate on what exactly the price was.

Ms K Tlhong (ANC) asked how the AG took the public into its confidence when officials were being investigated. These cases had been closed, but it was not known what procedures had been undertaken. Officials had been charged with corruption at SASSA, but how did the AG convince the public? When did they take the cases to the public? How did they convince the public that they were busy dealing with the corruption? The cases were mostly opened and then closed, so how would the AG convince them that they were not also part of the corruption?

Rev N Gcwabasa (MK) said that this Department was the only department that had the blessing from God. God had said that one must bring the tired inside so that they could take care of the people. God had created this department himself, and when the money did not go in, he complains, saying that they were not doing what they were supposed to do, which meant people were hungry outside.

The whole nation depends on this Department, and it must really care about the poor in this country to get the blessing of the nation. It includes everyone in the ecosystem -- the Portfolio Committee, the AG and the departments. There was a focus on all the politicians, but the officials were failing them. He believed the AG was the only one with the really intelligent information as to who must be prosecuted and who must not. The AG could investigate each and every cent, where it went and how it got there.

He understood why the AG did not classify it as a criminal offence when someone had done something wrong. The head of the department, the director general, was the accountable officer of the whole department. If there was something wrong and they did not pick it up internally as internal auditors, but the AG picked it up, then he was the one that must be fired first. He must go to jail first. The CEO must go to jail first.

The Committee could not allow this lack of care. They were responsible for the oversight. If people were corrupt in one position and then moved to another to be corrupt there also, the Committee had to do something to create indicators and flag them. They must lose their credibility. The AG must do something to create a certificate to say that this individual cannot take care of finances, and it must be given to him and the Department. It must state what the individual has done so that he cannot take another position or a higher one.

The Department stated that a certain amount had been paid to grants, but he wanted to see the social impact. One should not get a clean audit when one distributes the money but there is no impact on the ground. There was no social impact assessment on the money that had gone out or what it had done on the ground. They needed to see the social impact to know whether the Department had done well.

Accountability was paramount. The heavens were watching them. The DSD was the only department that the heavens were watching. They needed to take care of the poor, and if they did not, they would have failed God himself.

Ms K de Bruin (PA) said there was a woman in her constituency that she had been helping to apply for a SASSA grant, and it had taken three years to achieve success. However, they had given her a grant for only the first six months, and then till 12 months, and then it had declined. How long would it take until they make her a permanent recipient, because she cannot work?

Mr K Ramalia (ANC) said the Committee had been sitting there last week with the Department, considering the annual performance plan (APP) of 2023/24. When looking at the report for 2022/23, it might be necessary to find a way to synchronise their input. Part of the APP must be their action plan, so that when they come here and present the APP, the Committee could give them something. He added that an audit action plan was the strongest tool the Committee had for their monitoring and evaluation role.

Another gap was that there was the executing authority -- the AG -- and there was the executive authority and the Committee, which was the legislative body. The accounting officer would be brought to the Minister, so these legal actions would filter through everybody until they came to the Committee, so how could they hold these people responsible?

He asked if there had been applications for condonation, and what the conditions were. How many of those applications could not be processed because they were awaiting investigations and court cases? He asked for a list of those applications for condonation, their conditions, how many were not being processed because of the court cases and investigations, and how far they were regarding the progress of investigations and court cases.

Mr Munyai recommended that they must find out which company audited SASSA, because the AG might have to come herself to explain the figures. Regarding the nature of disclosures on page 22, the AG must know what the Committee was concerned about. There was no clarity, as no basis for the justification of the closures had been provided. There was too much out of the R8 billion that SASSA spends every month to pay the grants. It was a very serious figure.

The Committee must recommend to the Minister that the post for SASSA's CEO must be advertised immediately. One could not have 67-year-olds who were still officials of the Department -- they had to be kicked out. The Committee was holding them accountable. They needed to have a meeting with the AG herself, and a joint meeting with the previously mentioned security entities.

The Chairperson said that it had been a meeting of the Committee, but that it was also an induction meeting. She therefore appreciated that the AGSA had allowed the participants time to understand what they were dealing with, and to ask questions beyond the expected timeframe.

She said the Committee would invite the Department to respond to what they had heard today. She asked the AGSA if the Department had made any contributions to the R1.29 billion that had been recovered. Had any of the work that the Committee was trying to do, and that the AGSA had been doing, made any contribution to that R1.29 billion? She was grateful to the AGSA for doing the work to recover that money.

Responses

The AGSA responded that in terms of the MI process, the responsibilities of the accounting officer and authority were stated. Where there is irregular expenditure, they must investigate and stop it. They must take action, and must recover the money. When non-compliance was identified, AGSA looked at the impact, and whether there is potential for financial loss. It becomes a legal process, and they make sure that it is a fair process and that it does follow the law.

When they raise an MI, they look at what the actions were that the accounting officer must take. They notify the accounting officer and tell them they must implement their responsibility as an accounting officer. Then they gave AGSA a written representation of what they were going to do. AGSA then agrees or disagrees with them, and tells them what they were going to do.

For example, if they identify that there were a certain number of people working for the public sector that were now receiving grants, they would look into their controls and make sure that datasets were received and then matched. AGSA would come back to check that, and ensure they had implemented such a control. If such control had been implemented, then they ticked it. Then, they asked who was responsible and looked at what the individual had done to implement the policy that was in place to stop this from recurring.

The next step is to check if the funds have been recovered. There were different elements. Some of them would involve the fusion centre, where the SIU would come in. AGSA would see within the Department if they had the capabilities for recovering the funds, or would check that the fraudulent activity had been reported. They would provide a list of how they had resolved the material irregularity, and would check that it had been reported to the South African Police Service (SAPS) or to the Hawks.

AGSA was not necessarily mandated to deal with criminal investigations or for the recovery, but they did have a memorandum of agreement (MOA) with the bodies to whom these matters had been referred. They also ask the Committee to assist them. They would then provide a written list of those that had been resolved, which ones were with SAPS, and which ones were still in the recovery process.

Once they were sure the entity had played its part -- closed the control weakness in the environment and identified who was responsible -- AGSA would be concerned with the way that consequence management was carried out. If a legal opinion and a human resource (HR) process had been followed, it becomes a little difficult to say that consequence management was not done. However, in terms of the MI process, AGSA does check that people are identified and disciplined. If it is a fraud case, it does get taken to the SAPS. If it was something that required a recovery of funds, they make sure that it is followed up.

Regarding the five cases that had been resolved, AGSA would meet with the Committee again, clarifying that 'resolved' did not mean that they were gone -- it meant that the matter was sitting with the police and would involve the financial statements under receivables, where the money must still come. It might just be sitting somewhere else, and the AGSA would have to reflect that in the write up as to where one could find it in the financial statements. How AGSA resolved it would indicate how to follow up, as it would be out of their control. But when they leave it, they would ensure it was with the right people.

She asked that the consequence management conversation be tabled, because the AGSA was also not comfortable with how conclusions were reached in terms of consequence management. Even a verbal warning was part of an HR process and was consequence management, but was it appropriate for the transgression? That was what needed to be discussed with SASSA, and decided whether or not it was appropriate.

Ms Singo elaborated on the questions regarding the R316 million and the R74 million. Both figures went back to 2014 and were raised as a result of the mandate that said that they should not have paid the service providers. SASSA itself had paid the recipient, therefore there was no money due to CPS. As a result, SASSA then disclosed the R74 million as previous mis-expenditure. It was required of them to investigate who was responsible, but that had not happened. That was why in 2021, when they received extended powers, they had resuscitated the matter.

Regarding the R316 million, Corruption Watch had taken the matter all the way to the Constitutional Court to say that it was not right for SASSA to have paid that money. The Court had made a ruling that SASSA must recover the R316 million with interest from CPS. That process was ongoing, but CPS was now in liquidation, so they may not be able to recover the R316 million. AGSA had noted that there was a recovery process in place, but it was not known how much they would get.

In the issue of CPS, the key element was consequence management. The forensic investigations had concluded that the people involved were no longer officials within SASSA, therefore the accounting authority was no longer able to implement disciplinary action against them. This pointed out the importance of conducting investigations. These investigations were conducted only after SASSA had declared both matters were material irregularities. That was when they had gone to National Treasury and assisted them in getting two firms to investigate the matter. Confusion then occurred, as people were no longer employed, and the actions recommended could not be taken against them. The only process to follow then was to recover the money, which was still ongoing.

Ms Singo highlighted that it was within the Portfolio Committee’s rights to call the accounting authority of SASSA and the accounting officer of the DSD to explain their part in how they dealt with these MIs. They could explain why the matters had taken so long to investigate and why certain actions could no longer be instituted.

There should be some contribution by this portfolio to recover the R1.29 billion. Because of the R350 SRD grants, SASSA had been able to withhold certain amounts. SASSA withholds amounts when applicants are ineligible, and thereby contributes to not paying applicants twice. They were trying to address that concern.

One of AGSA's recommendations to the accounting officer regarding the R350 grants was to recover money paid to people who were not eligible. They had indicated that when looking at the cost-benefit, that might not be the right way to do it, as they would spend too much time trying to trace the payments. Therefore, withholding the grant when a person applies again helps SASSA to get the money back.

With regard to the interests due from CPS, it was disclosed in the financials. It was part of the recovery process through the liquidation.

She said that AGSA would not expand on the question of Gauteng, as the police were auditing the Department. The Committee could work with them to get responses.

Regarding the matter of fraud, AGSA conducts an audit according to its standards. It requires them to get reasonable assurance, which was based on evidence that one would receive from the Department about its entities. They always highlight in their reports that the conducting authority has a responsibility to detect fraud and deal with it, so when they identify red flags within their audits that may indicate fraud, they immediately inform the accounting officer to follow up on those investigations. From their side as auditors, they cannot really say that fraud is happening until an investigation has proved that fraud was happening.

She also commented on the breakdown of certain amounts by condonations. SASSA and the DSD were also in a position to provide information to the Committee.

An AGSA official referred to the R316 million paid to CPS, and said it was legally impossible to claim that from two people at the same time. The liquidation process had to be finalised for now, and then one could see how much could be recovered from CPS. The question was whether SASSA needed to take legal action. For AGSA, it was legally impossible to recommend that legal action must take place as there was already an internal process happening to resolve the matter.

Although KZN received the highest number of grants, it was not possible for AGSA to say that this province would receive more or that another one would. Control of the funds was also an issue, and on SASSA’s side, there was the issue of the databases -- they did not necessarily have the means to verify that someone was eligible for a grant, as they were still using the old system. They say that they had requested the data from the respective grant entities, but they were not necessarily receiving that data.

The inspectorate issue was currently at the Department. SASSA had a fraud unit which was currently in charge of all the fraud reports.

Ms Singo addressed the Department's performance plan. From the AG’s perspective, although it did look at the annual performance plan, it relies on the Committee to look at whether the APP does give service delivery. She asked that attention be paid to the way that the APP was written. They needed to think about how they would measure it and how it was impacting the beneficiaries. When AGSA audits, they look at whether the APP had been approved and whether one could measure where the money was. While they could measure it, they should read carefully to determine if the money would reach the intended people. How was the money going to reach that last individual? She said that government systems had to be integrated, so that one could make real time assessments of people. Real time verification was very important. Verifying only after an ineligible individual had been paid was a problem. SASSA should have been ahead of AGSA with regard to addressing this problem.

Further discussion

Mr Munyai (ANC) again asked which company had audited SASSA.

Ms Magerman said that SASSA and the DSD were audited by the AGSA.

Ms Abrahams asked if it was possible to compile the questions that the AG could not answer into a list that they could present to the DSD when they came to meet with them so that repetition could be avoided.

The Chairperson thanked the AGSA for allowing them to ventilate their issues and for responding as responsibly as they had. They had taken their advice in terms of following up on issues. She assured them that they would do their part as the Portfolio Committee.

The meeting was adjourned.