ATC110824: Twelfth Report Annual Report & Financial Statement of Department of Social Development, & the report of Auditor-General on Financial Statement of Department of Social Development for 2009/10 financial year

Public Accounts (SCOPA)

Twelfth Report of the Committee on Public Accounts on Annual Report and Financial Statement of the Department of Social Development, and the report of the Auditor-General on the Financial Statement of the Department of Social Development for the 2009/10 financial year, dated 24 August 2011

 

1. Introduction

 

The Committee on Public Accounts (the Committee) heard evidence on and considered the content of the Annual Report and the Report of the Auditor-General (AG) on the 2009/10 financial statements of the Department of Social Development (the Department).The Committee noted the qualified audit opinion, highlighted areas which required the attention of the Accounting Officer, and reports as follows:

 

2. Transfers and subsidies

 

The Auditor-General identified the following:

 

a)   The occurrence of social assistance grant expenditure with an approximate value of R10,5 billion as disclosed in note 8 to the financial statements could not be verified due to limitations placed by South African Social Security Agency (SASSA) which acts as an agent for the Department.

b) A number of grant beneficiary files requested from SASSA were not presented for audit purposes. Furthermore, numerous files presented by SASSA did not contain the necessary information that is required to form the basis for valid grant payment.

c) The agency’s records did not permit the application of alternative audit procedures regarding the social assistance grant expenditure.

d) The information and explanation considered necessary for the occurrence of social assistant grant expenditure was not available.

 

 

 

The Committee recommends that the Accounting Officer ensures that:

 

a)       Management reviews application forms as well as supporting documentation to make sure that they are complete before approval of the grant;

b)       Beneficiary files are properly maintained and safeguarded against loss or misplacement; and

c)       Reviews are performed quarterly in order to identify any changes in circumstances of the beneficiary.

 

3. Flow of Funds

 

The Department of Social Development (the Department) has an oversight responsibility and no management authority over SASSA which creates a complex relationship between the two bodies. This results in the performance of the SASSA’s management having an impact on the Department’s audit opinion. Below were findings by the Auditor-General based on the administration of SASSA which have an impact on the Department’s audit record as reflected in the Annual Report of the Department of Social Development’ for the 2009/10 financial year.  

 

The Auditor-General drew attention to the following:

 

A dual accountability relationship exists between SASSA and the Department of Social Development (the Department) where grant expenditure is being reported on the annual financial statements of the Department of Social Development. The current relations result in actions of SASSA having an impact on the audit report of the Department. 

 

 The Committee recommends that the Accounting Officer ensures that:

 

a)   Arrangements relating to the flow of funds so as to clear any uncertainties on the roles, responsibilities and accountability for the expenditure of funds allocated to the Agency, are reconsidered;

b)   Corporate governance and particularly the accountability relationship between the Department and SASSA needs to be addressed urgently; and

c)   Responsibilities of the Department with regard to in-year monitoring of SASSA management of funds are properly managed.

 

4. Conclusion

 

The Committee further recommends that the Executive Authority submits a progress report on all the above recommendations to the National Assembly within 60 days after the adoption of this report by the House.

 

Report to be considered.