Department of Social Development Audit Outcomes

Meeting report

Auditor-General of South Africa on 2023/24 audit outcomes for DSD
Ms Mbali Tsotetsi, Deputy Business Unit Leader, and Mr Puleng Molapo, Senior Manager, presented.

The 2022/23 audit recommendations that had not been implemented were highlighted:
- Internal control deficiencies on grant disbursements have not been fully addressed and similar findings were reported in 2023-24.

- There was no satisfactory progress to fill vacancies; some vacant posts continue to be frozen as they are currently unfunded.

- Internal controls for collection and verification of data supporting reported performance achievements were not improved to ensure credibility of performance in the annual report.

Ms Tsotetsi said that these deficiencies had a negative effect on the lived experiences of the citizenry, as grants are still being paid to ineligible beneficiaries, resulting in losses to the fiscus.

Overall audit outcome
The Department and the NDA audit outcomes have regressed due to material errors identified in the annual performance plan and/or the annual performance report. DSD and the NDA obtained unqualified audit opinions with findings compared to prior years unqualified with no findings. At the NDA, there was non-compliance with legislation as effective and appropriate steps were not taken to prevent fruitless and wasteful expenditure and there was a lack of consequence management against officials who incurred irregular and fruitless and wasteful expenditure. The outcomes of the other entities in the portfolio remained the same.

Quality and reliability performance indicators and targets
Outcomes for DSD and NDA regressed compared to prior year

DSD
Indicators were not well defined:
- At least one GBV shelter established in each district
- At least one Khuseleka Centre established in each district.

Actual achievements not agreeing to what was reported:
- Number of Orphans, Vulnerable Children, and Youth (OVCY) in G2G Districts provided with core package of services
- % of OVCY (in G2G districts) with HIV positive results to adhere to treatment

NDA
Actual achievements not agreeing to what was reported such as number of beneficiaries participating in income generation projects

SASSA
The following two indicators had significant findings:
Percentage of disputes resolved within a stipulated timeframe
Percentage of enquiries resolved within a stipulated timeframe

Grant disbursements
Of the R259 billion (99.4%) DSD budget vote expended, 96.45% of which was spent on social assistance grants.

Total underspending in 2023/24 on social assistance was R1.5 billion. A large portion of the difference is attributable to the child support grant (R797 million). The remaining underspending is the Social Relief of Distress (SRD) R350 grant (R591 million) as a result of the changes to the means test and the qualifying criteria for beneficiary applications.

Observations on grant payments - 2022/23
The Department spent 97.5% of the budgeted social assistance (grants). In 2022/23 total underspending on SRD grants was R4 billion. The main reason for underspending was the low up-take of the R350 Social Relief of Distress grant following the lower income threshold and bank verification of applicant income. The SASSA benefits administration and support programme manages the grant administration from application to approval as well as beneficiary maintenance.

GBV Victims accessing psychosocial support
DSD aimed to provide psychosocial support services to GBV survivors in implementing the National Strategic Plan on Gender-Based Violence and Femicide (NSP on GBVF). DSD did not meet the target: Delivery of psychosocial support to victims of GBV and femicide by DSD, which includes the establishment of Khuseleka centres in each district in nine provinces and victims accessing the GBV command centre (GBVCC).

Although 143 GBV shelters were established, they have not been established in all districts.

NDA Key insights on disbursements to NDA funded projects
For some civil society organisations (CSOs), AGSA could not confirm if the allocated funds were used for their intended purpose due to the following:
- Variances were noted between expenditure report and actual supporting evidence/invoices
- Instances were noted where the CSOs spending as per the NDA designated bank account did not correlate with the actual expenditure report or supporting document/invoices

(See document for details).

Discussion
Mr M Sibande (ANC, Mpumalaga) referred to the 2022/23 audit recommendations and overall message. He asked what exactly the problem is with NDA and SASSA non-compliance and where they are lacking.

AGSA had stated that poor performance planning and reporting has an impact on service delivery. He asked at which level SASSA is failing to keep records. Who is failing?

On consequence management for those responsible for irregular expenditure and fruitless expenditure, he would like to know by when this will be implemented.

Mr Sibande referred to the material irregularity (MI) process and asked how long will it take for the money to be recovered.

He asked for something to be done about the unmet performance targets for Grant Disbursements and Providing Medical and Psychological Care for GBV Victims and requested a deadline for these.

He requested to be updated on the Khuseleka Centres.

He referred to Grant Disbursements and no system in place at SASSA offices as well as grant payments in 2022/23 and requested that SASSA does something about challenges of grant payments to the deceased as well as Home Affairs.

On government employees receiving social grants, he asked for these people to be shamed and removed. He asked the people and levels and which system and who is supposed to be implementing these levels and doing something about them.

Ms L Arries (EFF, North West) asked what measures are in place for the lack of consequence management. She asked if any SASSA and Postbank employees who received illegal grants are still in service. She asked what measures are in place for NDA to monitor CSO funding.

She asked about vacancies in key positions that never get filled. What are the plans for filling these vacancies in 2024/25? How far along is the command centre that is not operational? She noted the millions SASSA received to upgrade its systems. How much has been spent in the past five years to upgrade the SASSA system?

Ms T Breedt (FF+, Free State) asked if the audit action plans by DSD and its entities have been submitted and if they speak to the problems and audit findings of the Auditor General.

And secondly, what is the percentage of the total irregular findings of that R1.5 million of the greater total of monies that will actually need to be recovered, she asked what that is, She requested an indication of that.

On the lack of consequence management, she asked if disciplinary steps are not being taken or if disciplinary steps are taking a long time and if there is a reason for that.

Ms N Du Plessis (DA, Gauteng) referred to the quality of financial reporting and asked how that links to the audit findings. Was AGSA able to determine the budget spent on software and the IT systems? Were the vacancies in top management, middle-management or entry-level?

She stated that officials should be held responsible for the MIs identified. She asked if management has taken responsibility to ensure that allocated resources are procured economically and utilized efficiently.

She referred to AGSA’s overall observations of the DSD portfolio and requested explanation on the meaning of oversight and if this is happening now there is new management. Has there been a shift? Why is there not a history of excellence in the APP. What is missing in the APP – is it management, knowledge, lack of process, systemic or lack of e-government support?

Mr M Mokwele (ANC, Limpopo) stated that AGSA needs to tell the Committee why the department and its entities are not implementing parts of the audit action plan.

Ms N Chirwa-Mpungose (EFF, Gauteng) asked who these NGOs are that are claiming money from DSD and who are the liaision officers in the department supply chain processing these NGO claims and NGO requirements. She asked why is DSD is not building capacity for these claims and asked AGSA to broaden their scope to find out much more detail about this. What alternative system would AGSA recommend that DSD implement for the resolution of claims? What system should the Committee propose to DSD so it can be held accountable? Secondly, what efforts does AGSA take to ensure its recommendations are implemented? What are the innovations AGSA is employing?

Ms J Adriaanse (ANC, North West) asked what processes are now in place to address the poor performance and transgressions in SASSA Grants Administration. Does AGSA know if the consequences were communicated to staff for not meeting performance expectations? Can AGSA provide examples of how consequence management was applied in the past and how it is to change going forward? From which date were staff aware what the consequences will be if they do not perform and achieve the necessary targets. What will be used to track performance and what performance matrix will be used to ensure that there is data integrity?

Ms Z Ngcobo (MK, Kwazulu Natal) asked for a detailed explanation for the reasons for the audit outcomes particularly the significant increase in irregular expenditure and fruitless and wasteful expenditure. She asked what corrective measures will be taken to prevent future occurrences and what consequences will be faced by those responsible.

The Chairperson asked for more details about the enforcement mandate AGSA received in 2019 with the amendment of the Public Audit Act. She asked for more information about SASSA employees receiving social grants. She asked if DSD had submitted an audit action plan for 2023/24 and if DSD had implemented the 2022/23 audit recommendations on time.

The Chairperson referred to the SASSA service provider that did not render services and asked what measures can be put in place to ensure that does not happen again. She asked where AGSA got the information about beneficiaries who were ineligible to get grants. What system did they use to get that information?

The Chairperson requested detailed written responses as well but for now AGSA skim through its answers due to time constraints.

AGSA response
Ms Michelle Magerman, AGSA Business Executive, noted that AGSA tries to improve and expand its work and over the years the reporting has grown. She gave the example of Insights which is very new to them.

Ms Magerman clarified that once AGSA finishes the audit, they do request that audit action plans are drawn up by the department and its entities. It is important that the Director General as the department accounting officer and the board as the public entity accounting authority monitor the action plans as well as internal audit. It is unfortunate that some of the actions are not implemented. AGSA requests that the Portfolio Committee also follows up on those action plans to see where it is not monitored.

This is where the extended mandate or powers of the Auditor General comes to identify if there is something that meets the definition of a material irregularity (MI). SASSA and DSD do have here material irregularities that AGSA has raised. The extended She referred to the extended mandate that they have raised and if this or the items meet a irregularity they will request the Accounting Officer to look into that particular matter and they follow up if this was recommended to those commitments by the Accounting Officer and if they are followed through and if they recall that the Accounting Officer does not follow through they will issue them a remedial action which is giving them an instruction to act and should they not they issue a certificate of debt for the irregularities that they have presented the Committee and that there has been action as they can see some Officials are disciplined and some areas are being taken to the State Attorney for debt collection, so we are seeing movement.

She also raised the concerns they have as the Auditor General. As the Auditors of the Social Development they need to see a Culture that is changing and we cannot audit via a irregularity. Officials must come in and do their Job on a daily basis and here this is where they urge that consequence management must be taken.

She explained that consequence management can be taken in various ways but most importantly if there is a transgression it is the responsibility of the accounting officer to investigate and also to take the person through the disciplinary process according to the Labour Relations Act. There is quite a lot in play for performance management and it must be done.

In SASSA, AGSA has seen that some disciplinary cases take long. The investigation takes long and therefore it does weaken the disciplinary case in terms of the Labour Relations Act and how that process needs to unfold. AGSA has highlighted this to the SASSA accounting authority that cases should not take too long. Their response is that it has almost prescribed which is not correct. We need to check that when a transgression is identified, they investigate. It should not take more than six months. Consequences can mean a warning or dismissal – there are different sanctions. The environment should improve. Nobody should be comfortable about transgressing. AGSA would like to ensure that official accountability is in the system. Everybody must come to work and do what they are supposed to do. That culture that needs to be bettered. That is why AGSA always talks about consequence management. It needs to be implemented and it needs to be timely.

AGSA is meeting with DSD regularly to ensure it implements what has been recommended and they meet targets such as having Khuseleka Centres in every province as this is needed.

The problem is that the database system does not operate in real time and that is the key process that needs to be implemented. The system should be a preventer and not a reactor. The system should be integrated with other systems such as Home Affairs.

Ms Magerman said that one needs to ensure that the system is integrated so if someone is deceased, SASSA stops the grant immediately and not pick it up only six months later.

Ms Magerman said that Ms Tsotetsi could add information if needed.

Ms Tsotetsi replied that the Committee questions had been covered and AGSA would submit detailed written answers as per the Chairperson’s request.

The Chairperson thanked them for the presentation and engagement.

The Committee considered and adopted the 27 November 2024 meeting minutes and the meeting was adjourned.