Audited Financial Statements of the Justice Department & Guardian Fund: hearings
Public Accounts (SCOPA)
08 May 2007
Meeting Summary
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Meeting report
STANDING COMMITTEE
ON PUBLIC ACCOUNTS (SCOPA)
8 May 2007
HEARINGS ON AUDITED FINANCIAL STATEMENTS OF THE JUSTICE DEPARTMENT &
GUARDIAN FUND
Chairperson: Mr T
Godi (PAC)
Relevant Documents:
Department of Justice Annual Report 2005/06 [available at www.doj.gov.za]
Auditor General
Report
Audio
Recording of the Meeting
SUMMARY
Members of the Committee met with the Department of Justice in order to
discuss the audited financial statements of the Department of Justice and the
Guardian's fund. The Chairperson begun by asking the Department to provide
clarity on whether the extraordinarily long investigations were the norm in the
Department. Members felt that something needed to be done to deal with the
issue of financial incompetence amongst governmental staff, and that the
committee would not allow this type of situation to continue. Other members
felt that the Department needed to provide clarity on why certain offices had
been excluded from the audit.
MINUTES
Discussion
The Chairperson begun by asking the Department to provide clarity on
whether the extraordinarily long investigations were the norm in the Department
Adv M Simelane (Director-General: Department of Justice) replied that the
Department relied on and used the suspensions as a way of persuading others to
speak up against transgressions.
The Chairperson asked the Department to state whether the problem in the
investigations was due to the lack of staff or the large amounts of
transgressors, and also to what extent did the vacancy rate impact on the
Department's ability to have officials freed from other responsibilities and
extraditing the investigations.
Adv Simelane replied that the vacancy rate was high; however the vacancy rate did
not affect departmental operations. As the Department strengthened the auditing
processes, it discovered a great deal of transgression. It was also important
to note that when the Department choses someone to perform investigations, it
had to be someone with the right expertise that was able to deal with serious
matters through its disciplinary process. The Department currently had four
members under suspension, who had been charged with serious matters, and the
investigations were still pending.
The Chairperson stated that he was concerned by the length of the investigation
periods, and said that they needed to be shortened. He then asked the
Department to elaborate on what has been done to deal with the issue of the
personnel files.
Adv Simelane responded that the records in the Department's files were the
responsibility of a unit called the Registry. The Department discovered that
the unit was incorrectly placed, and had now been moved to the Director
General's office. The Department felt that it if all units were placed in one
area, it would be easier to access to information. A new system had been
implemented, in which personnel files were checked on a regular basis, and
taking people into account on the mismanagement of files.
The Chairperson asked the Department to comment on what was being done to
correct the performance information situation.
Adv Simelane responded that the Department had developed an indicator metric to
ensure the alignment. The Department had also sent out the relevant
requirements for performance information to all the units, and a memo would be
issued to each of the units on what was required regarding performance
information.
Ms S Gomm (Chief Financial Officer) responded that the performance indicator
metric was based on a strategy that had been approved in August 2005.
Mr T Bonhomme (ANC) raised the issue of inventory management, and asked the
Department to provide clarity on how one ensured that there were no stock
shortages.
Adv Simalane stated that the Department had dedicated resources to training the
necessary officials, and the situation occurred as a result of individuals not
following the very necessary management processes.
Mr Bonhomme asked the Department to state whether the situation would once
again occur
Adv Simalane responded that it the situation did occur, it would not be of the
same magnitude.
Mr Bonhomme asked the Department to provide clarity regarding the issues around
the software tangibles.
Ms Gomm replied that software was placed under current expenditure; however the
auditor had a different opinion. The Department was awaiting feedback from
treasury in order to determine the way forward.
Mr Bonhomme asked the Department to state whether something would be done after
there was a report back.
Ms Gomm replied that the Department was waiting on feedback from treasury and
the auditor general. One also needed to bear in mind that the software was
internally generated, and there was no external market for it.
The Chairperson stated that it seemed that the problem had not been fully
resolved and that issues arising from inventory management were sorted out.
Mr V Smith (ANC) asked the Department to provide details surrounding the status
of Mr McKenzie.
Adv Simalane replied that Mr McKenzie’s had been contracted to assist with the
Moneys in Trust.
Mr Smith asked the Department to provide clarity on the status regarding the
vacancy levels around financial management, as it was no longer acceptable that
government did not have financial management personnel.
Adv Simalane replied that there was still a 30% vacancy rate, and no
significant movement in the filling of posts. The Department has begun a
work-study programme, which would provide clear indications on the type of
financial processes that were in place.
The Chairperson asked the Department to elaborate on when a work-study dealing
with the competency of those in employment and the high vacancy rate would be
available.
Adv Simalane stated that the work-study should be resolved by the end of July
Mr Smith asked the Department to provide clarity on what the status was in
terms the Department’s ability to manage Moneys in Trust.
Mr A McKenzie (Project Manager: Moneys in Trust) stated that in terms of the Money’s
in Trust, there used to be a situation where there was individual incompetence,
which had been resolved. The Department was currently in a situation where
there was organizational incompetence, in that there was still is no system
capable of achieving a sound system of financial management.
Mr Smith stated that something needed to be done to deal with the matter, and
the Committee would not allow that type of situation to continue.
Mr Trent stated that Guardian Fund has massive amounts of money, yet performs
dismally. It would be rather silly to raise various issues, as the same answers
would be provided.
Mr T Nombembe (Auditor General) stated that he was conscious of the fact that
the issue dealt with massive volumes, and a cashbook situation. There should be
a basic system where cash received was actually captured; there was no need for
a complicated system. The problem in the Department was one of internal control
issues rather than the systemic issues.
The Chairperson stated that it was time to put issues of Moneys in Trust and the
Guardian Fund aside, as there was no point in pursuing them. Also there were
certain issues that had been discovered to go way beyond issues raised by Mr
Smith, and the issues need to be followed up upon.
Mr Trent stated that the Guardian Fund had been set up to protect the most
venerable people in society and therefore something needed to be done to
improve the situation.
Adv Simelane replied when dealing with the Moneys in Trust issue, one discovered
that there were flaws in the accounting and the management of funds. What the
members and Auditor General had alluded to, were matters that the Department had
already perused, and whatever measures and steps were taken, there would still
be opportunities that would make fraud easy.
The Department was making progress with the Guardian Fund, and was ensuring
that correct systems were in place. There should be a different debate on the
Guardian Fund, which was about development, and therefore should be
administered by the Department of Social Development. A big challenge still
remained in the handling of maintenance money. Receiving money should not be
the business of the court, the courts business should be to ensure that that
the necessary action was taken if the payment is not made. Raising such matters
enabled the Department to elevate the systems that were in place.
The Chairperson stated that the issues surrounding the Guardians Fund and Moneys
in Trust was another debate, however a receipt should be given whenever someone
paid money to a court official.
Adv Simelane replied that court officials received money with no information on
the sender; this made it difficult for officials to issue receipts.
Mr Trent asked the Department to provide clarity on why the Grahamstown and
Cape Town offices were excluded form the audit.
Ms Gomm replied that the Department had asked the auditors to reduce the scope
of the auditing, as the same findings that the auditor found in one office would
be done in all the offices. The decision on which officers would be audited and
the ones that wouldn’t was one that the auditors took. It was important to note
that the Department provided the auditors with all the information from the
offices that were not audited.
Mr Smith requested that SCOPA meet with the Justice Portfolio Committee,
together with treasury in the near future, in order to sort out the matter. He
then asked the Department to provide details on the progress regarding the
forensic audit.
Ms Gomm replied that it was the Department that requested a forensic
investigation, as it suspected irregularities in the contracts. The findings
confirmed that there were indeed irregularities in the supply chain management
systems; however the report had not formally been tabled.
Mr Smith asked the Auditor General to State when the report would be tabled
Mr Nombembe replied that the report was in its final stages, and would be
available soon.
Mr Trent asked the Department to provide clarity on the criminal assets
recovery accounts
Ms Gomm replied that the criminal assets recovery accounts were published separately
and audited for 05\06, and had been tabled. It is a qualified report, as a
result of the disclosure of assets under the curator's control.
The Chairpersons asked if the matter had been raised with the auditor general
and national treasury
Ms Gomm replied there had been discussions and the Department was awaiting
guidance from the national treasury
The Chairperson asked national treasury to provide clarity on the matter.
Mr Msulwa Daca (Chief Director: Accounting Services, National Treasury) that
the issue is under the hospices of the National Prosecuting Authority. Treasury
is busy trying to thrash out various opinions with the prosecuting authority in
order to achieve finality on the matter.
Mr Trent asked whether the issues around the asset register had been resolved.
Ms Gomm replied that the question should be tabled to the National Prosecuting
Authority.
The Chairperson said that there were lots of problems, and that some of the
issues raised by the
Director General were policy issues, the matters raised regarding the vacancy
rate were generic problems, whereas the issues raised the role of government were
issued that needed a different approach. The Committee could only hope matters were
speedily resolved.
The meeting was adjourned.
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