ATC100824: Report on Auditor-General on the 2008/09 financial statements of the Department of Correctional Services
Public Accounts (SCOPA)
Eighth Report of the Standing Committee on Public Accounts on the Report of the Auditor-General on the 2008/09 financial statements of theDepartment of Correctional Services, dated 24 August 2010
The Standing Committee on Public Accounts (the Committee) heard evidence on and considered the contents of the Annual Report and the Report of the Auditor-General on the 2008/09 financial statements of the Department of Correctional Services (the Department). The Committee noted the qualified audit opinion, highlighted areas which required the urgent attention of the Accounting Officer, and reports as follows:
- Internal Controls
The Auditor-General reported the following:
1.1 On the Audit Committee
a) The Audit Committee has not fulfilled its responsibilities for the year as set out in Section 77 of the Public Finance Management Act (No.1 of 1999) and Section 3.1.10. of the Treasury Regulations.
b) The internal audit unit did not fulfill its responsibilities for the year as set out in the Treasury Regulations number 3.2.
c) There were significant deficiencies in the design and implementation of internal control and risk management.
The Committee recommends that the Accounting Officer ensures that:
a) The Audit Committee and internal audit unit are adequately staffed and function properly; and
b) The Department implements appropriate internal control and risk management measures.
1.2 On Asset Management
a) Assets are counted annually and exceptions are not followed up timeously.
b) Documentation relating to assets were not readily available for examination.
c) The control activities surrounding the control of assets are in place but they are not applied appropriately.
d) Assets captured on LOGIS resulted in information not being available on a timely basis to allow effective monitoring of events, activities and transactions to allow prompt reaction.
e) Assets recorded on the financial systems were not reconciled to the fixed asset register.
f) Data recorded by the information and financial systems was not compared with physical assets/stock and discrepancies exist.
g) Management does have a strategy in place to ensure that ongoing monitoring is effective but this is not being applied effectively with regards to asset management.
The Committee recommends that the Accounting Officer ensures that:
The Department develops and implements a monitoring strategy that will address matters related to proper counting, verification, recording and documentation of assets as provided for in Section 10.1.1 of the National Treasury Regulations.
- Capacity Issues
The Auditor-General identified the following shortcomings:
a) The Department had a high vacancy rate in critical occupations, e.g. nurses (25.4%), pharmacists (44.4%), medical practitioners (20%), finance and economics related professionals (26.1%), financial & related posts (47%) and information technology (66.7%).
b) Inadequate training of personnel.
c) The Human Resource (HR) plan has not been updated with the projected information for the 2008-09 financial year. The HR plan provided only reflects projected information for the 2006-07 financial year, resulting in the department not complying with chapter 1, part 3, paragraph D1(c), of the Public Service Regulations (PSR).
The Committee recommends that the Accounting Officer ensures that:
a) A comprehensive human resource strategy is developed that will attract, retain and address the remuneration of skilled professionals in critical occupations in order to ensure that the Department carries out its mandate successfully;
b) The training resources available within the public service are adequately utilised at all levels.
c) The Public Administration Leadership and Management Academy (PALAMA) is speedily engaged to ascertain the training requirements within the Department.
d) A comprehensive HR plan is developed annually as required by the Public Services Regulations.
- System-related Issues
The Auditor-General identified the following shortcomings:
a) No proper reconciliations were performed between WAT and LOGIS systems to ensure that all assets are captured.
b) Lack of independent reviews by management caused shortcomings in internal controls.
c) Inadequate policies and procedure manuals have resulted in incomprehensive business processes.
The Committee recommends that the Accounting Officer ensures that:
a) There is continuous performance monitoring and reconciliation between WAT & LOGIS systems to ensure that all assets are captured.
b) Policies and procedures are developed and implemented to ensure the adequacy of business processes.
- Unauthorised Expenditure
The Auditor-General identified the following:
The Department incurred unauthorised expenditure amounting to R483 million as a result of implementing the Public Service Co-ordinating Bargaining Council (PSCBC) resolution no 1 of 2007 on the improvement of salaries and other conditions of service for the financial years 2007/08 to 2010/11.
The Committee recommends that the Accounting Officer ensures that:
The Department properly budgets for its salary increments and other conditions of service in line with the PFMA.
- Conclusion
The Committee is alarmed by the Department’s poor financial planning as it noted during the hearing. The hearing revealed that the Department had budgeted R 297 million for payment of overtime work but ended up paying R1.2 billion to balance its overtime bill. Therefore, the Committee recommends that the Accounting Officer ensures proper financial planning to avoid such occurrences.
The Committee is of the view that there was value-for-money for the Department when it was utilising the services of the Special Investigative Unit (SIU) in rooting out corruption in the Department. Therefore, the Committee recommends that the services of the SIU be continuously utilised by the Department to follow up on any occurrences of corruption within the Department.
The Committee has noted the recurring qualification on assets since the 2005/06 financial year, and it is for this reason that it calls for an urgent progress report from the Department to outline the steps taken to correct this situation.
The Committee further recommends that the Executive Authority should submit a progress report on all the recommendations to the National Assembly within 60 days after the adoption of this report by the House.
Report to be considered
Documents
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