ATC080129: Reports 2-14: South African Airways; Department of Defence; Department of Health; Department of Correctional Services; Department of Justice & Constitutional Development; Department of Public Service & Administration; Department of Land Affairs; Presidency; Department of Trade & Industry; Department of Public Works

Public Accounts (SCOPA)

Second Report of the Standing Committee on Public Accounts on the Annual Report and the Report of the Independent Auditors on the financial statements of the South African Airways (SAA) for the year ended 31 March 2006, dated 29 January 2008 

The Standing Committee on Public Accounts (SCOPA), heard and considered evidence on the Annual Report and the Report of the Independent Auditors on the financial statements of the South African Airways (SAA) for the year ended 31 March 2006,

The Committee noted the unqualified audit opinion expressed by the Independent Auditors, and trusts that future audit opinions will be equally unqualified.However, the Committee raised its concerns on the following matters and reports as follows: 

GOING CONCERN

SAA has been forced to review its structures and core businesses in order to remain a competitive, profitable and the airline of choice on the African Continent. The Board has approved the proposed plan for restructuring and work has commenced on certain aspects of implementation. All the restructuring processes will be completed within the next 18 month. 

The Committee recommends that the Accounting Authority ensures that: 
 

a)     restructuring is successfully approved, efficiently funded and implemented

 

b)     revenue management is enhanced through the recruitment of suitably qualified and skilled staff

 

c)     training to staff on use of revenue accounting system is provided

 

d)     management embarks on the restructuring as decided and ensure that it is properly approved and funded

 

e)     all deadlines are met and Parliament is updated with the progress report

 

f)       the low morale of staff is addressed urgently.

 

COMPLIANCE WITH LEGISLATION 

SAA has embarked on a strategy to comply with the laws and regulations affecting its operations. A monitoring plan to monitor compliance with laws and regulations has been approved and is currently being implemented. Until the monitoring plan is fully operational, SAA is unable to confirm compliance with legislation and regulation.

The Committee recommends that Accounting Authority ensures that:
 

a.          management fully implement processes and systems to monitor compliance with all applicable legislation;

 

b.          management implement the necessary systems and processes to monitor compliance with the PFMA and also finalise the shareholders compact to agree with performance criteria;

 

c.          Parliament is quarterly updated with regard to the effective implementation of the regulations.

 

Capacity and/or people related issues (financial skills)

The staff members involved in the revenue accounting do not possess the necessary skills and experience to utilise the new revenue accounting system (RAPID). The problems encountered in revenue accounting, amongst others, included: 
 

a.          the lack of control surrounding the safekeeping of manual tickets and flight manifests;

 

b.          errors with the allocation of the total ticket revenue collected for the various sectors of the itinerary included in the ticket;

 

c.          suspense accounts not being cleared for payments received for tickets, however the sales information has not been captured on RAPID;

 

d.          delays in processing interline claims. Claims not processed within 6 months are forefeited.

 

The Committee recommends that the Accounting Authority ensures that:
 

a.          staff with relevant skills and qualifications are considered to fill the RAPID posts and appropriate training be provided where it is lacking;

 

b.          systems are put in place to ensure that all claims are processed on time and all transactions are cleared timeously.

 

4. Mango Airline

The Committee noted the establishment of the Mango-airline as a full subsidiary of SAA.

The Committee recommends that the Accounting Authority provides Parliament with a cost benefit analysis in terms of value for money to the taxpayer in justification of the establishment of the airline.

The Committee commends the management of SAA’s commitment in following up and addressing the system weaknesses regarding procurement transgressions identified by the auditors during the previous years. SAA management must furnish the Committee with a progress report on this issue within 60 days of the adoption of this report by the National Assembly.

Report to be considered.

2. Third Report of the Standing Committee on Public Accounts on the Annual Report and the Report of the Auditor-General on the financial statements of the Department of Defence, for the year ended 31 March 2007, dated 29 January 2008

SECTION A

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 Defence, for the year ended 31 March 2007.

The Committee noted the qualified audit opinion expressed by the Auditor-General. The Committee raised its concerns on the following matters and reports as follows: 

1.Tangible & intangible assets, accruals, irregular, fruitless and wasteful expenditure, rank review and comparatives 

The Auditor-General’s report highlighted that:
 

a.          The department did not manage, develop, and revise its information systems in an effort to continually improve the usefulness and reliability of its communication of information.

 

b.          The department’s current information systems do not comply with National Treasury’s requirements as per the accounting framework, specifically in respect of tangible and intangible capital assets and accruals.

 

c.          Control activities including review at functional level, physical control, segregation of duties and timely authorization identified as necessary, are not in place and are not being applied with respect to tangible and intangible capital assets.

 

d.          Appropriate policies, procedures, techniques and mechanisms do not exist with respect to the proper identification and recording of irregular, fruitless and wasteful expenditure.

 

e.          There is a lack of sufficient, appropriate supporting documentation and approval to support the eligibility of each member’s promotion as part of the rank adjustment process.

 

The Committee recommends that the Accounting Officer ensures that:
 

a.          The current information systems used, is upgraded or alternatives be investigated to implement a single logistical system that can provide the financial information as required by National Treasury in respect of accruals, tangible and intangible capital assets.

 

b.          Shortcomings in the information systems are reduced by implementing manual controls to ensure proper identification, classification, recording and disclosure of accruals and tangible intangible capital assets.

 

c.          Policies and procedures are developed, approved and implemented to ensure the proper identification, classification, recording and disclosure of irregular, fruitless and wasteful expenditure in the annual financial statements.

 

d.          A complete investigation is launched to determine the extent of the invalid rank adjustment cases and related irregular expenditure or overpayments. The Accounting Officer must also report in terms of section 38(1)(g) of the Public Finance Management Act, 1999 (Act No. 1 of 1999) in writing immediately to National Treasury on discovery of irregular expenditure,

 

2. Travel and subsistence, Prepayments and advances, Receivables, Departmental revenue

The Committee noted that the validity and completeness of S&T claims and advances could not be verified due to the fact that they could not be traced back to the relevant supporting documentation. The completeness of receivables could not be confirmed due to the fact that transactions and other significant events were not properly classified and promptly recorded. Furthermore, the department is losing revenue due to unserviceable equipment situated in the mission areas, which could have been prevented had reasonable care been taken.

The Committtee recommends that the Accounting Officer ensures that:
 

a)       The Financial Management System (FMS) is upgraded to improve the usefulness and reliability of travel S& T information.

 

b)       Management implement a strategy to enforce ongoing monitoring, compliance and control over the serviceability of assets deployed to mission areas.

 

c)       Adequate and sufficient training is provided to employees in respect of the administration of receivables.

 

d)       Management perfom independent reconciliations and review information on a regular basis to ensure proper classification and prompt recording of transactions and that sufficient documents are kept and always available.

 

3. Lease commitments, commitments and clearing accounts

The report highlighted that:
 

a)       Transactions and other significant events were not properly classified and not promptly recorded in respect of lease commitments;

 

b)       Appropriate policies, procedures, techniques and mechanisms do not exist in respect of each of the department’s activities. This resulted in the commitments understated with an amount of at least R3 192 509; and

 

c)       Necessary control activities were not in place and not being applied with respect to clearing accounts.

 

The Committee recommends that the Accounting Officer ensures that:
 

a)       Internal controls are implemented to ensure that transactions and other significant events with respect to lease commitments are properly identified, classified, promptly recorded and disclosed.

 

b)       Management institutes control processes by which all financial authorizations approved and not fulfilled are collated and included as part of commitments at year end.

 

c)       The implementation of control activities is in place to ensure that sufficient and appropriate evidence exists for amounts included in the clearing accounts and that these accounts are cleared monthly.

 

4.Regional Service Council levies (RSC) and Contingent liabilities

The amount paid in respect of RSC levies is understated by an amount of approximately R3 130 038. Furthermore, no supporting evidence could be submitted to substantiate accruals amounting to R37 922 268. Appropriate policies, procedures, techniques and mechanisms do not exist with respect to the proper identification and recording of contingent liabilities arising from the National Environmental Management Act, 1998 (Act No. 107 of 1998)(NEMA).

The Committee recommends that the Accounting Officer ensures that:

Management reconciles and reviews the calculation of RSC levies and ensure that DoD complies with all aspects of the Regional Service Council Act, 1995 (Act No 109 of 1995) (regarding what should be included in determining remuneration in order to calculate these levies).

Appropriate policies, procedures, techniques and mechanisms are implemented to ensure the proper identification, classification and recording of contingent liabilities arising from NEMA.

5. Misclassification of expenditure

The Committee noted that management did not review at functional or activity levels, those results in misclassification of expenditure in the financial statements. 

The Committee recommends that the Accounting Officer ensures proper classification of expenses to enable a true reflection in the Annual Financial statements.

SECTION B

6. SPECIAL DEFENCE ACCOUNT (SDA)

The Committee noted the following shortcomings:
 

a.          lack of financial reporting framework classification

 

b.          approved constitution for the Compliance Programme is still awaited

 

c.          no policy, procedures and/or documented approval from National Treasury governing the handling of moneys to the credit of the SDA.

 

The Committee recommends that the Accounting Officer ensures that:
 

a.          The accounting framework applicable to the SDA and the classification of the SDA, which have been outstanding since 2004/05, is clarified with National Treasury as a matter of urgency.

 

b.          Since the DoD has referred the matter of the approval of the constitution of the compliance programme to the Department of Foreign Affairs, the Accounting Officer should follow-up with the Department of Foreign Affairs and report back to Parliament within 60 days of the adoption of this report by the National Assembly.

 

c.          Surplus funds not required for immediate use are invested and withdrawn when necessary. 

 

d.          A policy governing investments of all moneys to the credit of the account is compiled with, approved and implemented as a matter of urgency. If investing is not the way to go, the Defence Special Account Act, 1974 (Act No. 6 of 1974) must be amended.

 

SECTION C

PERFORMANCE AUDIT 

7.Catering services rendered in DoD as conventional, outsourced and commercialised messes
 

The report highlighted numerous types of messes that render catering services for the SA Army, SA Navy, SAAF and SAMHS. The various messes are:
 

a.          Conventional - the DoD supplies all personnel and facilities with commodities that are purchased through DoD contracts;

 

b.          Outsourced - the DoD contracts out the catering service to a private service provider and payments are made according to contract specifications. The contractor is responsible for all personnel and commodities and utilises the DoD’s facilities; and

 

c.          Commercialised – the DoD pays the operating costs of these messes.

 

The most cost-effective messes were outsourced messes, then commercialised messes and the least cost-effective were conventional messes.

The committee recommends that the Accounting Officer ensures that:
 

a.          management furnishes Parliament with a comprehensive quarterly progress report with regard to the status of messes and the cost to feed a staff member per day;

 

b.          the SA Army starts reducing their catering costs;

 

c.          SAAF and the SA Navy re-evaluate the possibility to commercialize conventional messes;

 

d.          a feasibility study is conducted by the SAMHS to determine whether outsourcing their catering services at good quality hospitals will be cost effective.

 

8. Other shortcomings identified during the audit

 

Budget control for catering services was not effective and led to overspending by the SA Army and the SAMHS during the 2005-06 financial years.

The central administration of contracts by the Procurement Service Centres was un-economical, inefficient and ineffective, which led to overpayments and payments on contracts that were not renewed or advertised timeously, thus causing additional costs for the DoD.

The Committee recommends that the Accounting Officer ensures that:
 

a.          Controls are put in place to ensure that processes are followed as instructed in the guidelines and policies especially with regards to the budget;

 

b.          Unnecessary costs are avoided;

 

c.          Disciplinary actions are taken against officials, if processes are not followed as instructed by the PFMA.

 

Report to be considered.


3. Fourth Report of the Standing Committee on Public Accounts on the Annual Report and the Report of the Auditor-General on the Financial Statements of the Department of Health (NDoH) for the Financial Year Ending 31 March 2007, dated 29 January 2008 

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 Health (NDoH) for the Financial Year Ending 31 March 2007, and reports as follows:

For the 2006-07 financial year, the Auditor-General expressed a qualified audit opinion on the NDoH. SCOPA therefore requests the Accounting Officer to urgently address the following:

1. Systems-related matters

a. Asset management

The Auditor-General reported that, due to lack of reconciliations between the fixed asset register and the basic accounting system, he was unable to obtain adequate assurance regarding the negative adjustment totalling R31 million to the opening balance of R84 million. This adjustment was due to lack of monitoring of controls developed to ensure the safeguarding, reporting and maintenance of assets.

In terms of Treasury Regulation 10.1 and section 38(1)(d) of the Public Finance Management Act, the Accounting Officer of a department must take full responsibility and ensure that a proper control system exists for the recording and safeguarding of assets.

SCOPA therefore recommends that the Accounting Officer urgently ensures that:

a. the necessary capacity and proper monitoring of controls are developed to ensure the safeguarding, reporting and maintenance of assets. 

b. Division of Revenue Act (DORA)

The Auditor-General reported on the following problems with regard to the management of the Division of Revenue Act (DoRA):
 

i. The business plans, quarterly performance reports and monthly financial reports from the provinces were either not submitted for approval and monitoring purposes, or submitted late.

 

ii. Quarterly provincial liaison and visits to the provinces to physically monitor compliance with the DoRA were not always carried out due to shortage of staff.

 

iii. Information submitted in the provincial reports was inadequately evaluated, which did not enable the timeous identification of potential non-compliance with the conditions attached to these grants.

 

SCOPA therefore recommends that the Accounting Officer urgently ensures that:

i. business plans, quarterly performance reports and monthly financial reports from the provinces are timeously submitted for approval and monitoring

ii. there are properly skilled staff at the required level to perform provincial liaison and visits to physically monitor compliance with the DoRA

iii. there is proper monitoring and control to ensure compliance with the conditions attached to the grants.

(c) Transfer payments

The Auditor-General reported that, due to lack of monitoring of controls developed to ensure compliance, payments to the value of R35 million were made to an NGO in contravention of section 2.3 of the National NGO Funding Guideline which requires that service level agreements (SLAs) are signed before the funds are transferred.

SCOPA therefore recommends that the Accounting Officer urgently ensures that:

i. there is sufficient capacity to ensure compliance with legislation, procedures and guidelines.

2. Governance-related matters

The Auditor-General reported that, due to lack of a management framework, the NDoH did not comply with the National Environmental Management Act, 1998 (Act No. 107 of 1998) (NEMA) which requires the department to prepare an environmental plan within a year of promulgation of the act and every four years thereafter.

SCOPA therefore recommends that the Accounting Officer:

i. establish a management framework to ensure compliance with legislation and regulations.

3. South African National Aids Trust (SANAT)

The Auditor-General expressed an unqualified audit opinion on SANAT, with Emphasis of Matters on non-compliance with the Deed of Trust, section 53(1)-(5) of PFMA and the Public Audit Act, No. 25 of 2004.

The Deed of Trust sets out the objectives of the trust and requires that official meetings are held. Due to limited operations of the trust, the objectives were not met and no official meetings were held.

Section 53(1)-(5) of the PFMA requires that the budget of the trust is submitted to the Board of Trustees. According to the Auditor-General, the budget was not submitted.

SCOPA therefore recommends that the board:

i. ensures compliance with the relevant legislation and the Deed of Trust so that it can realise its mandate.

Report to be considered.


4. Fifth Report of the Standing Committee on Public Accounts on the Annual Report and the Report of the Auditor-General on the Financial Statements of the Department of Correctional Services (DCS) for the Financial Year ending 31 March 2007, dated 29 January 2008

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 Correctional Services (DCS) for the Financial Year ending 31 March 2007, reports as follows:

For the 2006-07 financial year a qualified audit opinion was expressed by the Auditor-General on the financial statements of the DCS. SCOPA requests the Accounting Officer to urgently address the following:

3. Asset management

The Auditor-General reported the following shortcomings with regard to internal controls:

i. No reconciliation was performed between the three different computer systems used by the department with regard to assets.

ii. No independent reviews were done by management. 

iii. Inadequate policies and procedure manuals were used and this led to inadequate business processes.

SCOPA recommends that the Accounting Officer ensures that:

i. a reconciliation is performed to ensure that all assets are captured;

ii. policies and procedures are updated and there is compliance with these policies and procedures.

2. Buildings and other fixed assets

The Auditor-General could not perform audit procedures regarding improvements/additions to the value of R1,252 billion, as the building that was renovated belongs to the Department of Public Works, but is disclosed in the books of the DCS.

SCOPA therefore recommends that the National Treasury, DCS and Department of Public Works should solve this issue as a matter of urgency.

3. Medical expenditure

The Auditor-General reported the following shortcomings with regard to medical expenditure:

i. He could not verify the validity and accuracy of an amount of R169 million for continuing members.

ii. Life certificates obtained did not include dependants’ information.

iii. In certain instances, contributions were made for deceased members.

SCOPA recommends that the Accounting Officer ensures that:

i. detailed information on continuing members is requested on an annual basis

ii. measures are put in place to verify that members are still alive 

iii. invoices and supporting documents are verified before payments are made

iv. money paid to medical aid on behalf of deceased members is paid back to the department and disciplinary action is taken against employees in cases where corruption or negligence is proven.

4. Receivables

The Auditor-General reported a recurring problem with receivables. For the 2006-07 financial year, an amount of R40 million for staff debtors could not be verified for completeness or accuracy.

SCOPA therefore recommends that this issue is addressed as a matter of urgency and that monthly reconciliations are done.

5. Vacancies 

A high vacancy rate in critical occupations such as health professionals, finance, economics and information technology was reported.

SCOPA recommends that the Accounting Officer ensures that vacant positions are filled and the department’s retention strategy is implemented successfully.

5. Consultants

SCOPA is concerned over the increase in the use of consultants by the department.

The committee therefore recommends that the department ensure that there is proper skills transfer to staff to eventually decrease the department’s dependence on consultants.

6. Public-private partnerships (PPP)

The public-private partnerships (PPP) were designed to assist government in the provision of correctional facilities. In the case of the DCS, the aim is that high security risk inmates are transferred to the private sector.

For the 2006-07 financial year, a cost of R560, 260 million was incurred by the department on the PPP.

SCOPA therefore recommends that the department supply it with a cost benefit analysis in terms of value for money to the tax payer on the envisaged PPP within 60 days of the adoption of this resolution by the National Assembly. 

SCOPA further recommends that this matter be referred to the Portfolio Committee on Correctional Services for monitoring.

Report to be considered.


5. Sixth Report of the Standing Committee on Public Accounts on the Annual Report and the Report of the Auditor-General on the Financial Statements of the Department of Justice and Constitutional Development (DoJ&CD) for the Financial Year Ending 31 March 2007, dated 29 January 2008 

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 Justice and Constitutional Development (DoJ&CD) for the Financial Year Ending 31 March 2007.

The Committee noted the qualified audit opinion expressed by the Auditor-General. The Committee raised concerns that needed the urgent attention of the Accounting Officer of the Department and reports as follows:

1. Governance arrangement

The Auditor-General reported that the current status of Third Party Funds, on which he had issued a disclaimer of opinion, was a direct result of the department’s attitude, in that there was a lack of accepting accountability and responsibility for the fund’s day-to-day activities.

The Auditor-General further informed SCOPA that National Treasury had issued a letter on 15 August 2007 directing the DoJ&CD on how it should account for the Third Party Funds in the financial statements.

SCOPA recommends that the Accounting Officer ensure that this matter is addressed as a matter of urgency.

2. Capacity or people-related issues

The Auditor-General reported the following shortcomings:
 

·        The vacancy rate at the department increased from 20% in the 2005-06 financial year to 23% in 2006-07, and this had a severe impact on the strategic objectives and operations of the department.

 

·        Appropriate disciplinary action was not taken against responsible employees, as the same findings on departures from approved policies and procedures were repeatedly noted.

 

·        Management and employees did not display a positive attitude toward internal control in all instances.

 

SCOPA therefore recommends that the Accounting Officer ensures that:
 

·        critical positions are filled

 

·        disciplinary action is taken against employees whose negligence has been proven and a report is submitted to Parliament within 60 days of the adoption of this report by the National Assembly.

 

3. NATIONAL PROSECUTING AUTHORITY (NPA)

The Auditor-General issued a qualified audit opinion on the financial statements of the NPA as a result of the following shortcomings:

3.1. Accountability and governance status of the NPA

No finality had been reached on the definition of the duties of the Accounting Officer.

The NPA had not been listed as an entity in terms of the PFMA.

The mechanism for the funding of the NPA had not been finalised.

SCOPA recommends that these matters are finalised as a matter of urgency to ensure that the NPA realises its mandate.

3.2. Capacity or people-related issues

The Auditor-General reported a 30.7% vacancy rate at the NPA, which had a severe impact on the strategic objectives and operations of the NPA.

SCOPA recommends that vacant positions are filled to ensure that strategic objectives are achieved and the operations of the NPA run smoothly.

4. CRIMINAL ASSET RECOVERY ACCOUNT (CARA)

The Criminal Asset Recovery Account is administered by the Criminal Asset Recovery Unit (CARU). 

The Auditor-General expressed a qualified audit opinion on the financial statements of CARA due to the following shortcomings:
 

·        No system or process was in place to enable CARU to account for and track the status of finalised confiscation and forfeiture orders and to track all cases handed over to curators.

 

·        No policies and procedures existed in respect of, amongst others:

 

·        maintaining and safeguarding assets forfeited to the state under their control

 

·        enforcing accountability of curators

 

·        accounting for cash in the custody of curators due to the uncertainty of the curator fees that must be deducted prior to cash being deposited.

 

·        An 80% vacancy rate for staff servicing the CARA.

 

SCOPA therefore recommends that, as a matter of urgency:
 

·        A system or process is put in place to enable CARU to fulfil its mandate

 

·        Policies and procedures are implemented

 

·        Vacancies are filled.

 

Report to be considered.


6. Seventh Report of the Standing Committee on Public Accounts on the Report of the Auditor-General on an Investigation into Procurement at the Department of Justice and Constitutional Development (DoJ&CD), for March 2007, dated 29 January 2008 

The Standing Committee on Public Accounts (SCOPA) heard and considered evidence on the following matters and reports as follows:

1. Procurement process

The Auditor-General reported lack of planning which led to non-compliance with the Supply Chain Management Policy and Treasury Regulations.

SCOPA therefore recommends that the Accounting Officer ensures that tender procedures are followed well in advance, before the expiry of current contracts.

2. Bid documents

The Auditor-General reported that there were inadequate internal controls to ensure that bid documents were factually correct, and as a result, bids had to be cancelled. The DoJ&CD incurred costs that could have been avoided, had reasonable care been taken.

SCOPA therefore recommends that bid documents are thoroughly checked for factual correctness by the relevant officials and they comply with relevant legislation. 

3.Contract awarded

It was reported that the service providers in the five provinces, that obtained the highest number of points, were not appointed and no justifiable reasons for this decision was recorded. 

SCOPA therefore recommends that the Accounting Officer ensure that contracts are awarded to service providers as stipulated in legislation and policies.

4. Declaration of interest forms

The Auditor-General reported that it could not be confirmed whether members of the departmental bid committee had filed the declaration of interest forms.

SCOPA recommends that the Accounting Officer ensure that members of the departmental bid committee declare their interests as prescribed.

5. Conclusion

SCOPA noted that the DoJ&CD had not been complying fully with the requirements of supply chain management.

SCOPA therefore recommends that the Accounting Officer:
 

a.          urgently addresses all the problems highlighted by the Auditor-General

 

b.          report back to Parliament within 60 days of the adoption of this resolution by the National Assembly on the progress made with the following issues:

 

i. his instruction to the Chief Financial Officer to address the supply chain management problems, as well as the actions initiated against responsible staff and suppliers

ii. disciplinary measures taken against officials who were charged or found guilty of misconduct for awarding contracts to service providers that did not qualify

iii. how the instances of fruitless and wasteful expenditure, due to bids being cancelled because of non-factual information supplied has been dealt with.

Report to be considered.

7. Eighth Report of the Standing Committee on Public Accounts on the Annual Report and the Report of the Auditor-General on the Financial Statements of the Department of Public Service and Administration (DPSA) for the Financial Year Ending 31 March 2007, dated 29 January 2008 

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 Service and Administration (DPSA) for the Financial Year Ending 31 March 2007, and reports as follows:

For the 2006-07 financial year the DPSA had an unqualified audit opinion, however, SCOPA requests the Accounting Officer to urgently address the following:

4. Governance-related matters

c. Audit committee

The Auditor-General reported that the DPSA did not have an audit committee in place for six months of the financial year under review.

SCOPA therefore recommends that the Accounting Officer ensures 

i. compliance with section 77 of the PFMA that refers to the establishment of an audit committee.

5. Risk management

The Auditor-General reported that the Department did not have a risk management strategy, risk management policy, and that the risk committee only met once for the year under review.

SCOPA therefore recommends that the Accounting Officer ensures that:
 

a.          The Department complies with section 38 of the PFMA which requires the maintenance of an effective and efficient risk management process.

 

b.          A risk management strategy is finalised.

 

c.          Vacant positions are filled.

 

6. Systems-related matters

The Auditor-General reported the following shortcomings with regard to internal controls:
 

a.          Inadequate systems and procedures with regard to all commitments and lease commitments;

 

b.          Inadequate monitoring over assets;

 

c.          Unavailability of a disaster recovery plan;

 

d.          Unapproved information security policy.

 

SCOPA therefore recommends that the Accounting Officer:
 

a.          Reports progress in addressing the above issues to Parliament within 60 days of the adoption of this resolution by the National Assembly.

 

4. Public Sector Education Training Authority (PSETA)

The Auditor-General identified an uncertainty over the going-concern status of PSETA, due to a total dependence on the DPSA as a source of income.

SCOPA recommends that the Accounting Officer ensures that

a.        This entity becomes self-sufficient through imposing levies, on the same basis as other SETAs, rather than depending on the transfer payment from the DPSA, to ensure that it will deliver on its intended mandate. 
 

The Auditor-General informed SCOPA that a police investigation was conducted during the year on suspected fraud that was discovered in thelearnerships within PSETA, and that arrests were made; also, that a forensic investigation was underway.

SCOPA therefore requests that the Accounting Officer 
 

a.          To report back to the Committee on the arrests made, within 60 days of the adoption of this report by the National Assembly and that the forensic investigation report is shared with SCOPA once it has been completed.

 

Report to be considered.


8. Tenth Report of the Standing Committee on Public Accounts on the Consideration of the Approval of Unauthorised Expenditure incurred by the Department of Land Affairs, dated 29 January 2008

The Committee considered evidence relating to the unauthorized expenditure in terms of the PFMA totaling R7, 182.00 that arose owing to the cost of contract services for the Lephotsoana ll Trust open day celebrations attended by ex-President Mandela in 2000/01 and reports as follows: 

The Accounting Officer confirmed that:
 

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

 

b)               no individual benefited unduly from such expenditure and;

 

c)               control measures are in place to prevent this from re-occurring.

 

Recommendation

Having considered the evidence and the steps taken by the Accounting Officer to prevent similar cases of unauthorized expenditure from re-ocurring, the Committee recommends the approval of the amount of R7, 182.00 by Parliament. 

Report to be considered.


9 Eleventh Report of the Standing Committee on Public Accounts on the Consideration of the Approval of Unauthorised Expenditure incurred by the Presidency, dated 29 January 2008 

The Standing Committee on Public Accounts (SCOPA) reports as follows:

The committee notes unauthorised expenditure totalling R15 331.06, which is made up of amounts that were outstanding when approval was granted for the overspending in 2000-01.

In the written evidence on the above-mentioned instances of unauthorised expenditure, the Accounting Officer confirmed that:
 

·                The overspending was of a technical nature and did not result in any losses to the state or the taxpayer.

 

Recommendation

In light of the above, SCOPA recommends that Parliament approves the amount of R15 331.06.

Report to be considered.


10. Twelfth Report of the Standing Committee on Public Accounts on the Consideration of the Approval of the Unauthorised Expenditure incurred by the Department of Justice and Constitutional Development, dated 29 January 2008 

The Standing Committee on Public Accounts (SCOPA) reports as follows:

The Committee notes unauthorised expenditure totalling R139 052 849.71, incurred during the following years: 1999-2000, 2000-01, 2001-02 and 2002-03, and reports as follows:
 

R5 199 704.46:	Attributed to increased personnel expenditure without the prior approval by the National Treasury
R844 416.00	The witness protection unit entered into a lease for an investigation in excess of R30 000.00 without inviting tenders. Due to security reasons normal procedures could not be followed
R23 884 729.25	Overspending on the administration of the courts (personnel overspending in 2001-02)
R63 014 000.00:	Overspending on Programme 1
R46 110 000.00:	Overspending on the administration of the courts (personnel overspending in 2002-03)

 

In the written evidence on the above-mentioned instances of unauthorised expenditure, the Accounting Officer confirmed that:
 

·                Services for the expenditure were received to the satisfaction of the Department;

 

·                No individual benefited unduly from such expenditure and control measures are in place to prevent this from recurring.

 

Recommendation

In light of the above, SCOPA recommends that Parliament approve the amount of R139,052 849.71.

Report to be considered.


11. Thirteenth Report of the Standing Committee on Public Accounts on the Consideration of the Approval of the Unauthorised Expenditure incurred by the Department of Trade and Industry, dated 29 January 2008 

The Committee considered unauthorized expenditure relating to previous years. It also considered evidence of the following unauthorized expenditure totaling R 32, 246, 285.72 that arose owing to overspending on programmes and losses, and reports as follows: 

1. During the 2003/04 financial year, an amount of R 32, 246, 285.72 in unauthorized expenditure consisted of:

2. R 14, 185, 849.88 related to the Department’s appeal against a judgment, but the appeal was dismissed with costs and interest was also paid; 

 R 11, 456, 455.06 related to losses incurred due to ruling of the high court cases against the DTI;

3. R6,375, 000.00 was reached in terms of Rule 34 of the Rules of the High Court;

4. R228, 980.78 was attributed to Shurlock, which was registered as an exporter in terms of general export incentive scheme (GEIS) and was entitled to payment under the scheme in respect of export by company. Shurlock submitted a GEIS claim which the DTI did not pay. The matter went to trial and DTI pay claim with interest.

In written evidence on the above instances of unauthorized expenditure, the Accounting Officer confirmed that:
 

a.          No individual benefited unduly from such expenditure; and

 

b.          Control measures are now in place to prevent this from recurring.

 

Recommendation

In light of the above, the Committee recommends that Parliament approves the total amount of R 32, 246,285.72 relating to the 2003/04 financial years. 

Report to be considered.


12. Fourteenth Report of the Standing Committee on Public Accounts on the Consideration of the Approval of the Unauthorised Expenditure incurred by the Department of Public Works, dated 29 January 2008

The Committee considered unauthorized expenditure relating to previous years. It also considered evidence of the following unauthorized expenditure totaling R 299, 218,429.94 that arose owing to overspending on programmes and losses, and reports as follows: 

5. During the 2001/02 financial year, an amount of R 41, 770, 429. 94 represented unauthorized expenditure. That amount consisted of:

R 32, 738,000.00 related to inadequate budget allocation received for thelease obligations of the National Government ; and 

R 9,032, 429.94 related to overspending on losses approved for write-off for which there were no funds available. 

Recommendation

1.3. In light of the above, the Committee recommends that:

i. Parliament approves the total amount of R 41,770,429.94 relating to the 2001/02 financial years. 

ii. The Accounting Officer recovers the losses in terms of Treasury Regulations 12 or finance the write off relating to losses from savings.

6. During the 2002/03 financial year, an amount of R 227, 088, 000.00 was incurred due to amongst other things; lease not adequately funded, improving capacity of municipality, damages and losses, and criminal acts and justice claims.

7. During the 2003/04 financial year, an unauthorized expenditure amounting to R 30, 360, 000.00 was incurred due overspending on capital and maintenance budgets and more significant over-expenditure on its property rates and municipal services budget. 

The Accounting Officer confirmed that:
 

a.          Services for the expenditure were received to the satisfaction of the Department;

 

b.          No individual benefited unduly from such expenditure;

 

c.          Control measures were in place to prevent this from reoccurring.

 

Recommendation 

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 R 257, 448, 000.00 by Parliament. 

Report to be considered.