DEPARTMENT OF PUBLIC ENTERPRISES

DRAFT RESOLUTION .

The Standing Committee on Public Accounts (SCOPA) heard and considered evidence on the Annual Report and the Report of the Auditor-General on the financial statements of the Department of Public Enterprises, for the year ended 31 March 2007.

The Committee commends the management of the department of public enterprises for the unqualified audit opinion expressed by the Auditor-General and trusts that future audit opinions shall be equally unqualified. However, the Committee raised its concern with the Accounting Officer and therefore reports as follows:

General matters

The Committee noted with concern the following issues raised in the annual report:

• a turnover of 10.8 percent especially in skilled and contract level for the 06/07 financial year; and

• the department. incurred a fruitless expenditure amounting to R80 million regarding late cancellation of a conference. The officials involved have since left the department. Approval has been granted to write-off the amount.

The Committee recommends that the Accounting Officer:

establishes and review reasons for staff turnover, develop and implement strategies that will eliminate the problems experienced.

The Committee expects the accounting authority to expeditiously rectify the issues in question. The Committee will await the report of the Auditor-General for the 2007/08 financial year to determine whether there had been any improvement on these issues.

The Committee therefore awaits the next Annual Report and the Report of the Auditor-General.

UNAUTHORIZED EXPENDITURE DEPARTMENT OF PUBLIC ENTERPRISES:

Expenditure totaling R 11, 006,245.00 incurred during the 1997/98 to 99/00 financial years was regarded as unauthorized expenditure in terms of the exchequer Act, 975 (Act No. 66 of 1975).

The Committee considered the following incidents that arose owing to procedural contravention of Treasury Regulations, state tender board and procurement procedures.

1.1 R 10,928,245.00 arising out of a request of the inter-Ministerial Committee on restructuring, for the appointment of the incumbent consultants to consultant to be extended, however state tender board ratification was not obtained; and

1.2 R 78, 000.00 was paid to a consultant for a leadership development programme without having invited official tenders.

The Accounting Officer confirmed that:

a) services for the expenditure were received to the satisfaction of the department;

b) control measures are in place to prevent this from reoccurring;

c) systems have been put in place to address expenditure control and financial management; and

d) official procurement training was conducted for all officials in the department in 2006, and was compulsory. When new officials are appointed there is a compulsory induction programme in place. Training and education on expenditure control, procurement and finance related issues are part of this process. Further all policies and procedures are available on the departments' intranet for easy reference, and these documents are revised as and when needed.

Having considered the evidence and the steps taken by the Accounting Officer to prevent similar cases of unauthorized expenditure from recurring, the Committee recommends the approval of the amount of 11,006,245 by Parliament.

Report to be considered.