General Report of the Auditor-General : discussion & Special Investigating Unit’s Relationship with SCOPA

PUBLIC ACCOUNTS STANDING COMMITTEE
20 November 2007
GENERAL REPORT OF THE AUDITOR-GENERAL 2006/07: DISCUSSION & SPECIAL INVESTIGATING UNIT’S RELATIONSHIP WITH SCOPA

Chairperson: Mr T Godi (APC)

Documents handed out:
SIU: Presentation to SCOPA

Audio recording of meeting

SUMMARY
The Auditor-General (AG) presented a report to the Committee, highlighting the major issues that arose with qualified reports of Departments. The concerns addressed the number of qualified reports, the timeliness if the reports and compliance issues. There was often lack of leadership within the departments and lack of skills within the management and accounting departments. A major reason for qualifications across the board was incorrect reflection of assets, and qualifications in respect of expenditure as departments were not disclosing vital spending information. Ideas for improvement included having a clearly defined action plan, goals and milestones as well as clearly defined skills sets and a monitoring tool.

Members also discussed the need for a proper fixed asset register, the need to consider hiring more people with experience rather than overqualified people, the non-attendance of key officials during the audit process, training courses for auditing, a more coordinated framework, a need to implement a better business process and the need to strengthen support units.

The Special Investigating Unit gave a report on its aims, mandates and activities to the Committee and discussed the possibility of forging a relationship with SCOPA. It indicated that type of work that it undertook, and described the relationships with other departments involved in law enforcement. Lack of capacity within the state was a problem and the Unit was building new capacity which would enable it to deal with more cases of corruption and maladministration, rather than outsourcing to private investigators.

The Committee discussed referrals of departments to the SIU, adequate reasons for referrals, the methods of contacting the SIU, forming a more cooperative relationship with the government and the steps of the investigation process.

MINUTES
Auditor General’s Report 2006/07
Mr Terence Nombembe, Auditor General, stated that the purpose of his Report was to highlight certain issues and root causes of problems, as this would assist the Committee to pick up issues and help with identifying symptoms of problems in the future. The information would assist in collaborating with other oversight structures to ensure that problems would be taken care of, as well as to encourage other Portfolio Committees to do better.

Mr Nombembe indicated that the analysis of the reports had indicated that most departments had an issue with asset management. He also noted that over 30% of the departments still had qualifications relating to expenditure. This was worrying as it meant that departments were not disclosing information. He warned that more of an effort was needed so that the problem did not go unattended.

The issue of disclosure centered on the ability of departments to account for the number of assets or liabilities that they held. There were also issues regarding compliance with legislation, particularly the Public Finance Management Act (PFMA) as well as with the National Treasury regulations.

Mr Nombembe gave some pointers as to how departments could achieve a better audit result. He looked at the role of leadership in entities and the need to implement an action plan so that departments could move to having unqualified opinions. The plans must have clearly defined milestones that would facilitate ongoing and effective monitoring of progress in addressing their shortcomings. At a strategic level, milestones enabled leadership to ask the right questions at the right level.

The effectiveness of the internal audit committee was very important as it meant that the bulk of the labour that was required to undertake the detailed analysis to pick up areas of effectiveness could be deployed. It was a reality that accounting officers would never be effective in dealing with issues unless the right assistance was given by the internal auditing department in ensuring that there was compliance and that the right controls were being used by the departments.

There was also a need for an effective monitoring tool or checklist to enable leadership to do effective management and monitoring of controls within departments. The AG’s staff were looking at how this could be piloted or implemented for the assistance of departments. They were also looking at strengthening their own unit as well as that of the Provincial Treasury.

The Auditor-General addressed the issue of the skills level. He wanted to look at how to identify and define a proper skills set for financial management in government. A clearly defined strategic framework was needed to cover the type of skills that were needed. The reality was that departments did not necessarily need everyone to be highly qualified accountants but rather they needed a blend of qualified people who could deal with complexities in certain departments and who could do basic administration of funding.

Audit standards were premised on the international standards of auditing. Audit quality was assessed through two critical processes. When the audit was completed a review was given and a second auditor, who was not involved with the audit itself, would go through the file again. It was important to ensure that all the quality aspects were accurate. The second aspect was the consistency review, where a comparative analysis of all the findings was made to ensure that similar conclusions were reached. The two internal processes were superimposed by an internal review from the regulatory report of auditors. This helped to ensure that conclusions were authentic, valid and of good substance.

On the accounting side, the AG would use the framework that was prescribed by the National Treasury (NT). The AG ensured that there was an understanding between his office and the National Treasury so there was no dispute about which accounting treatment they should be auditing. An important principle was established between the AG and the NT, that auditors did not get involved in accounting matters. It was the role of the NT and Provincial Treasury to prescribe and provide clarity on accounting treatments. The auditors’ role was to pick up on issues and refer them to NT.

The departments’ ability to make positive conclusions on information depended on the rollout of guidance from the National and Provincial Treasury. It was therefore important to strengthen the Provincial Treasury’s capacity structures to allow for better support. The AG also worked closely with the Accounting Standards Board (ASB) to ensure that the basis of the standards prescribed for government were based on the analysis of the readiness of the departments to cope with these standards and to ensure that the migration from cash to accrual accounting was appropriate.

Mr Nombembe focused on consolidated financial statements, looking particularly to the consolidation that related to the aggregation of numbers. The NT and ASB were making an effort to interpret the consolidation standards as defined by the ASB. They were looking at how the standards applied to the public sector.

Mr Nombembe also described good practices of financial management and reporting. There were highlights from other practices in moving from the cash to accrual accounting systems. Certain departments could, with the right amount of effort, move toward having unqualified opinions. Provincial departments could also move to getting unqualified reports. Issues of disclosure must be considered in order to make that move. He stressed again that incomplete treatment of assets was most often the basis of the qualifications.

This Committee should examine what those departments with unqualified reports had done to reach that status. Regular interaction was observed. Even for departments with unqualified reports, issues of concern were timeliness, quality, availability of key officials and internal control practices. These departments would need to use the framework as a checklist so as to achieve unqualified audit opinions. Measuring themselves against the framework would help them to move to where they should be.

Mr Nombembe identified the extent to which departments submitted their financial reports on time and to what extent auditors responded to legislative responsibilities to finish the audits on time. It was noted that there were high levels of compliance in achieving targets and completing all audits on time. Reasons for incompletion of audits stemmed from delays in submissions of financial information. There were also sometimes delays from the auditing side as they wanted to ensure quality in their own internal practices.

Discussion
The Chairperson thanked the Auditor-General for the presentation, which contained important and useful information and was well-structured.

Mr M Stephens (DA) wanted to know, with regard to troublesome departments and entities, if the reason for the qualifications to the reports was that some people in management did not take bookkeeping seriously. He also noted that many advertisements for financial positions indicated many years experience as a requirement. Top qualifications were not necessarily needed as sound knowledge and experience were also important. He wondered if departments were targeting the right people and if they should approach advertising differently.

Mr E Trent (DA) informed members that his question stemmed from a previous briefing, when Mr Nombembe informed the Committee that there was a leadership problem. He was concerned about the turnover in top management of departments. He enquired if this impacted adversely on the leadership roles of those departments or entities.

Mr B Pule (UPSA) asked what the general reasons were for not producing the financial statements on time. He also asked what the reasons were for the non-attendance of key officials during the audit process.

The Chairperson looked at root causes linked to qualifications for departments. He focused on the monitoring leadership tool and stated that it was applicable to all the issues that had been identified. Leadership also featured as a root cause for problems. There were similar problems with leadership with regard to Provincial Departments. The key question was to what extent the leadership role deficiency was the result of the inability of people to do their work effectively, and to what extent it was a product of skills shortage resulting from vacancies.

The AG stated that the attitude towards accounting was a very real problem as there were instances where people who attended training programmes who had very little or no understanding of accounting practices. Other people who attended the training courses were not going to be the ones doing the report or those who would be held accountable. Some people attending the training sessions did not even know what Generally Accepted Accounting Principles were.

A more coordinated framework was needed for the level of accounting skills needed by the Government. The National Treasury had a framework, but there was a question of how it would be implemented across the board.

Mr Freeman Nomvalo, The Accountant-General, informed members that this framework was developed for local government institutions. The concepts in the framework could easily be applied nationally and provincially, with slight modifications. He confirmed that some departments were sending the incorrect people to the training sessions and this did not achieve the desired effect. There were also issues relating to the understanding of accounting principles, and the training programmes were geared to those who already understood the basics of financial management, so they could go back and apply what they learnt in training to the financial statements.

Mr Nombembe then addressed the issue of the availability of key officials during the audit. He stated that this was a practice that the AG wanted to encourage as the availability of officials during the audit process improved the reports immensely. He noted that there was a great correlation between requirements and results of the audits but that the lack of an accounting practice resulted in difficulties when resolving issues.

Mr Nombembe said the general reason for the delays with financial statements had to do with the quality of the statements. There was an inability to support and substantiate the numbers with credible information, and this led to material adjustments having to be done during the audit.

With regard to the leadership issue, the involvement of leadership during the analysis of information created a higher degree of awareness of what roles and responsibilities leadership had in government. The AG created a template for monitoring financial management and were in the process of implementing the system to work through financial matters. This specialised area was affected by a competency issue.

Where there were vacancies, this was aggravated by instability in leadership and was also affected by the competency issue. Where there was a lack of leadership, the situation became even worse. The AG would like to see a level of leadership that was less susceptible to volatility. This meant leadership at the level of administrators and premiers.

Mr Nombembe stated that there was a need to strengthen support units such as internal auditors, audit committees, as well as Provincial and National Treasury, so that the leadership could be given the right amount of information to allow them to make better business decisions. Empowering these structures would mean better collaboration and coordination towards goals.

Mr V Smith (ANC) thought that the Auditor-General’s road shows were too narrowly focused. He thought the AG should educate the Public Accounts Committees as well as the “man on the street”. There needed to be a broader education that highlighted shortcomings found in the report. Often people did not understand the reports. Useful information was not being utilised.

Mr Smith stated that they had correctly highlighted responsibilities of the Accounting Officer and Auditor-General in the report, but warned that they needed to include consequences as this added pressure. They needed to make more of an effort for the process to work. He wanted to know what the AG was planning on doing differently. National Treasury needed to find a solution to the problem.

Mr Smith noted that most of the disclaimers or qualified issues stemmed from not having any reliable fixed asset register. This would be one of the biggest problems when moving from a cash to an accrual basis. It would not be possible to move to accrual if the issue with the fixed assets register was not regularised.

Mr Smith also raised the issue of leases. He stated that the report showed that the Government did not know its liabilities with regard to lease commitments or future commitments. The AG needed to inform the Committee when lease commitments were being exceeded as future generations would have to pay for them if the problems went unattended.

Mr P Gerber (ANC) stated that it appeared that Provincial Public Entities were worrisome as the number of disclaimers had doubled, as well as the number of qualified reports. He asked the AG to comment on this problem and asked if the issue related to the capacity of provinces to manage public entities.

The Chairperson also wanted the AG to expand on the instability of public entities.

Mr Nombembe said that there was instability in terms of the registering of public entities and the ability to know how many there were. This resulted in the AG not knowing how many entities to audit. He informed members that the AG and Treasury were having ongoing discussions to put systems in place that set a stable register of public entities. The reality was that the list of public entities was not properly formalized, and there was a need for a formal audit. It would have to establish capacity to do this.

With regard to the question on provincial entities, he noted that at a Provincial level issues coincided with reporting requirements of the International Standards of Auditing (ISA). The AG was mindful that more elaboration was needed on the impact on some of the findings. The report had just focused on root causes at this stage, but would focus on impacts next.

Mr Nombembe expressed confusion at what Mr Smith meant by “consequences”. Having looked at the impacts, he assumed that Mr Smith was looking the actions that would be taken if people did not perform. This was an area that the Public Service Commission (PSC) could take up effectively. Collaborations had already started with regard to goals set out in the mandate. Government would be encouraged to deal with consequences properly.

The Auditor-General agreed that the road shows needed to be extended in terms of coverage and broader education. There was still more work to be done and the AG’s office was establishing a stakeholder relationship unit simply to address questions that were raised. IT was also working on popularising and making the reports more understandable to the general public. There was also more action with civil society.

Mr Nomvalo addressed the public entities issue. He stated that part of the problem was the establishment of the public entities, as there were certain steps that needed to be taken. This process was not always followed. Departments needed to inform the Treasury that an entity had been established. There were instances where departments established public entities against the Treasury’s advice. Although there was a formal process, it was not always followed. The Treasury had established a Public Entity Governance Unit, which was looking into issues and updating the list. Treasury also worked through this Unit to follow up on some of the issues.

The Chairperson asked for and received confirmation from the Accountant-General that this was a compliance issue.

Mr T Mofokeng (ANC) commented on the issue regarding qualifications of accountants. He stated that the requirement of formal qualifications was often unfortunate as there were people who did not have the qualifications, but knew what they had to do.

Mr Trent noted that the Department of Home Affairs had been included under the category of having a qualified report. He wanted to know why this was, as the Committee had not received a report from Home Affairs. He also looked at the issue of leadership. He stated that business processes were about management and that management was about leadership. Very often the AG noted that there were no business processes in place. This was of particular concern as the civil service had moved to a more management-orientated style years ago. By now management should have been able to put those processes in place.

Mr Trent also noted that there was a trend of the same National Departments receiving qualified reports over the past few years. He said that it was understandable for the larger departments, where management was more difficult, but wanted to know why there was still a problem in the smaller departments. He wanted to know what the AG could do about it. He also wanted to know if the AG had raised the bar too high and too fast.

Mr Nombembe did not think that the bar was raised too high or too fast. He stated that the reasons for qualifications had nothing to do with the standards, but rather with the attitudes of people that were in charge. It also had to do with the supporting the results of the audit. The AG was also looking at the framework put through by the Treasury that allowed them to see which departments had responded adequately in terms of skills and leadership responsibilities, as well as whether they had achieved the desired results. Reports were analysed meticulously to minimise speculation as to why departments were being qualified. Areas that were qualified were clearly defined, as well as the reasons for qualification. All that was needed was a clearly defined action plan. Most departments were committed to achieving better results in the future.

The Auditor-General responded to issues regarding the business process and the leadership’s readiness to cope with them. Given the culture of the leadership and management, an issue that was identified was the importance of the support structures within Government. The roles of internal auditors, audit committees and Treasury were very important, as a lot of team work was needed to assist departments in prescribing appropriate business processes. They needed to employ the right resources to enable them to do the work. All that leadership could do was to act on the advice provided.

The Department of Home Affairs report had not been tabled but would be processed in the next few weeks. The result in the AG’s report was the same as the information that would be contained in the Annual Report.

The Chairperson thanked the Auditor-General for a very useful report but warned that the report showed that managers were not working efficiently and effectively. He noted that this was the greatest challenge for accounting officers and stated that they needed to know what the consequences were for underperformance.

Special Investigating Unit (SIU): Briefing
Mr Willie Hofmeyr, Head, Asset Forfeiture Unit, presented a report to the Committee and said that he wanted to discuss where the Special Investigating Unit (SIU) fitted in relative to other organisations, what their mandate was and what they achieved. They also wanted to look at how they could strengthen cooperation.

Bribery was the second most common crime that South Africans were exposed to, but most cases were not being dealt with in the system because of lack of capacity. The SIU was focusing on building capacity to enable them to deal better with corruption and maladministration. SIU had noted, from its work with departments, that there was an opportunistic use and more organised exploitation of systems gaps. When the systems were weak there was a systematic exploitation of opportunities. This was often done by organised crime units.

The SIU listed various bodies that had a mandate to deal with corruption. The first major body was the South African Police Service (SAPS). The main focus was on the commercial branch, which mostly looked at corruption cases. More serious cases were referred to the Organised Crime Unit. A small office was set up for Serious Economic Crimes in Pretoria, which would deal with very complex economic crime issues, including corruption.

The National Prosecuting Authority (NPA), had a National Prosecution Service that dealt with cases in the normal courts, but increasingly corruption cases would be dealt with in the Specialised Commercial Crime Courts. This had boosted the State’s capacity to deal with corruption. This was also a joint venture between the SAPS commercial branch and the prosecution service.

Mr Hofmeyr informed members that the Scorpions formed part of the NPA, and that corruption cases were an important part of their mandate. The Asset Forfeiture Unit (AFU) also dealt with cases of corruption. Other bodies that played a great role in preventing corruption were the Auditor-General, the Department of Public Service and Administration (DPSA), the Public Service Commission, the Public Protector and South African Revenue Services (SARS).

The mandate of the SIU centred on investigating corruption but now allowed it also to institute civil legal action to correct irregularities. He described the SIU as working like a standing commission on enquiries. It had similar powers and did not just produce a report; but also found solutions to problems. The mandate mostly focused on the public sector and corruption, but also looked at maladministration. It was also looking at abuse of systems within departments.

The SIU and Commissions of Enquiries operated similarly. The President would issue a proclamation that would allow the SIU to investigate the matter. It had the power to subpoena documents and records in a normal law enforcement agency, had had powers of search and seizure and was allowed to summon and interrogate witnesses and suspects under oath.

The key challenge was to build sufficient capacity in the State to enable them to do the investigative work that was required. There was still a great level of outsourcing in Government to the private sector, especially to forensic accounting firms. Sometimes there was also an issue of lack of skills.

Mr Hofmeyr informed members that there were significant increases in the SIU budget from Treasury over the past few years, due to the work that accomplished. It now had an effective national presence with offices in all the provinces except the Northern Cape.

Key performance indicators against which SIU measured itself were savings, preventions and cash recoveries. Savings included savings to government departments. The second measure looked at prevention of future loss. SIU also measured itself against the amount of evidence that was prepared for use in civil litigation. Targets had increased to massive amounts. These targets related mostly to the recovery of benefits from people who had been illegally receiving social grants.

The SIU did not have the power to do arrests or prosecutions, so much work was done with the police or the Scorpions. It did its best to work with agencies and measured how well it was working by seeing how many cases they managed to get through the system.

The SIU focused on achieving a level of success including ensuring that they provided quality forensic investigations. They aimed to become the Government’s forensic investigation unit by showing that they were able to implement and ensure that corrective action was taken in all projects. It was also cheaper and more effective. Of advantage was the fact that it focused mainly on corruption and maladministration issues, and the best resources were used so it was more effective. If a department had a problem, then the SIU would solve every part of the problem from the investigation to ensuring that they had the proper evidence, to preparing evidence and testifying. This had enabled them to establish good working relationships with different departments and organisations.

Funding from different departments contributed greatly to the SIU’s budget but Mr Hofmeyr explained that it did not want to become too reliant on departments’ money as not all investigations were done in a cooperative manner. Treasury had provided the SIU with additional funding and therefore Treasury funding would become the majority funding in future.

SIU had partnerships with the Departments of Correctional Services, Transport, Local Government in Eastern Cape, Social Development, Housing and the National Treasury.

The SIU had experienced growth and it was therefore important to ensure that it remained clean and untainted by corruption within the organisation. In order to achieve this, they adopted a harsh internal integrity programme which included lie detector tests, drug testing and asset disclosure. There had been no major scandals.

Another important challenge was building extra capacity, as well as new capacity in the State. One success had been the trainee investigator programme, which was set up to improve capacity and ensure better representation in the profession. The SIU had also started to recruit people and attract skills from the private sector.

The SIU essentially dealt with two types of investigations. One involved a specific procurement or transaction that went wrong. The other dealt with systemic weaknesses in the system. Capacity had been created to enable them to deal with these issues on an ongoing basis.

Possible areas for discussions with SCOPA included the role of SCOPA in alerting them to specific cases, as well as the recommendation of the use of the SIU to certain government departments. The SIU also tried to set up research capacity to achieve a better understanding of where the problems were in different levels and areas of Government. The SIU suggested joint research and assessments with SCOPA, as they could provide better insight into certain issues in the country.

Discussion
Mr Smith welcomed the proposal that SCOPA and the SIU work together. He informed the SIU that they had indicated that they did quite a bit of outsourcing to the private sector due to lack of capacity. This created concerns in other areas. He worried that a project would be given to the SIU and they would then pass it on to the private sector.

Mr Smith also commented that many of the smaller departments were not taken seriously when they approached the State Attorney about recovering loans. He wanted to know if he could refer these departments to the SIU.

Mr Hofmeyr stated that Mr Smith may have misunderstood the issue of outsourcing. He informed members that the SIU did very little outsourcing. SIU was marketing itself as a replacement for private companies that were being used traditionally by government departments. The SIU was in the process of building capacity to replace the outsourcing that was currently taking place by other State departments.

Mr Faiek Davids, Deputy Head of the SIU, added that with regard to their investigation and specialist support capabilities, the SIU had considered outsourcing with regard to business processing and high level forensic accounting. They were still looking into it as some capabilities were not needed on a sustainable basis.

Mr Hofmeyr responded, in regard to recovery of loans, that the SIU had become one of the biggest debt collecting agencies in the country. They employed specialist trackers and tracers. The SIU also set up a special department to ensure that acknowledgement of debts were signed and also recovered. It was not doing the work on behalf of the state attorney, as it had its own civil litigation powers. If there was a high level case of debt collection that needed intervention, then the SIU would offer its services if the case fell within its mandate.

Mr Trent commented that he did not think that the general public knew what the SIU did. He also spoke about business processes and systems. He said that the AG often reported that there were inadequate risk management policies and systems in place. Departments would then be asked if this had resulted in losses. In some cases they reported that there could be losses, but that they were not sure. He wanted to know if that was an adequate reason to refer the SIU to a department. There were also cases where the AG reported that there were definite losses. He asked if those cases would also have to be referred to the SIU.

Mr Trent also commented that there were only five proclamations signed since April. He noted that this was very few, given all the things that were taking place. He also wanted to know to what extent the SIU would be contacted by private whistle blowers, and if they knew about the SIU. He asked what the difference was between the SIU of today and the former Heath Commission.

Mr Hofmeyr stated that the mandate had not changed but the focus had changed in many ways. SIU had tried to develop a more cooperative relationship with the Government. It also found that there were more than enough government departments who were keen to fight corruption. He warned that the cooperative model had its limitations but that it had served the SIU well and allowed them to develop capacity over the years. The SIU also improved coordination with other law enforcement agencies and many issues had been resolved.

Mr Hofmeyr confirmed that there had been only five proclamations, as the slowness of the process had become quite an issue over the years. The process was quite lengthy as it would have to go through the departments as well as the Presidency and the lawyers. The focus had now changed, shifting towards working with the National Departments on ongoing investigations. This was not an ideal model but it helped to make a difference. The SIU was also looking at methods of achieving a quicker referral process.

In regard to systemic gaps that may or may not have lead to losses, this was difficult to answer in general terms as it would have to depend on the specific case being spoken of. For example, with the social grants investigation, there was some work that was done. However, there were problems with the speed at which the system had been rolled out. Action would be taken to mend the problem. Losses could also have occurred from weak financial services.

Mr Stephens asked the SIU what it did between the time of receiving the allegation and getting the proclamation, as it could not investigate officially until such time as there was a proclamation. This in turn needed a certain amount of evidence. He asked if whistle blowers needed to contact the SIU directly and who they needed to report to. He wanted to know what SIU did after receiving the information, and how long whistle blowers would have to wait to receive protection.

Mr Gerber wanted some examples of where the Provincial SCOPA and the SIU had interacted. He also asked for an explanation of what was meant by “unlawful conduct by any person causing serious harm to the public interest”.

Mr Nombembe stated that an issue of concern was that departments could not provide evidence for expenditure. This area consisted of multi-millions of rands, and was mainly in the area of procurement.

Mr Davids informed Members that the SIU received matters from a number of sources, both direct calls and through the hotline, soon to be re-launched. When people come to them, the SIU would interview them through the Opportunities Management Section that would look into the matter, conduct interviews with the relevant people and decide whether the matter fell within the SIU mandate. Once the determination was made, the case would be referred to the Forensics Investigations Section and an assessment would be made as to whether a proclamation would be pursued. More information would be gathered and submissions would be made to the Department of Justice (DoJ), who would then submit it through the Minister of Justice to the President. A proclamation would then be achieved.

A proclamation allowed the SIU to use its special powers to investigate the matter. This included the power of interrogation as well as search, seizure and subpoena, which allowed it to investigate the matter fully. There were times when an investigation was done before a proclamation as the information was already available. The process sometimes took quite a bit of time but working with the DoJ has resulted in shortening the procedure.

Mr Hofmeyr indicated that SIU was often contacted by a range of people who had confidence in the SIU but whose problems did not fall within the mandate. In this case the matter would be referred on to the police or the Scorpions. In regard to serious allegations raised in communities, people could contact SIU through the website as well as through a land line and 24 hour hotline.

Protection of whistle blowers was still an issue. The SIU would try to protect them as details of the case were exposed.

With regard to Provincial SCOPAs, there was some interaction with Limpopo and the Eastern Cape. Unfortunately, nothing concrete or practical had developed from the engagement.

Mr Hofmeyr agreed that there were huge gaps in audits in some departments where money was not being accounted for. This sort of problem would fall in to the SIU’s mandate.

He stated that there were huge capacity problems, which resulted in the volume of work being larger than the number of people who were involved in security issues. Even though there was growth, there were still a limited number of cases that could be taken on.

The Chairperson thanked the SIU for their interaction and warned that they needed to clarify their referral mechanism. It was also important that issues raised by the Auditor-General did not recur. The SIU and AG would need to have more interaction.

The meeting was adjourned