ATC110824: Thirteenth Report Annual Report & Financial Statement of South African Social Security Agency, & the report of Auditor-General on Financial Statement of South African Social Security Agency for 2009/10 financial year

Public Accounts (SCOPA)

Thirteenth Report of the Committee on Public Accounts on Annual Report and Financial Statement of the South African Social Security Agency, and the report of the Auditor-General on the Financial Statement of the South African Social Security Agency 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 South African Social Security Agency (SASSA). The Committee noted the disclaimer of audit opinion, highlighted areas which required the attention of the Accounting Authority, and reports as follows:

 

2. Payables

 

The Auditor-General identified the following:

 

a)   The existence, completeness, valuation and allocation to the value of R178.1 million of payables stated at R879.2 million in note 13 to the financial statements due to the limitations placed on the scope of the work as sufficient and appropriate evidence was not available for audit purposes.

b) The existence of payments to the value of R35,1 million included in payables stated at R879,2 million in note 13 could not be verified as sufficient and appropriate evidence was not provided.

c)       The Agency’s records did not permit the application of alternative audit procedures regarding the payables.

 

The Committee recommends that the Accounting Authority ensures that:

 

a)  The information and supporting documents that management provides are accurate and complete;

b)   The Agency understands the flow of accrual basis of accounting transactions from initiation to payment.

 

 3.  Bank overdraft

 

The Auditor-General identified the following:  

 

a)       The existence of payments to the value of R35.1 million included in the bank overdraft stated at R345.5 million in note 10 to the financial statements due to the limitations on the scope of the work as sufficient and appropriate evidence did not exist.

b)       The Agency’s records did not permit the application of alternative audit procedures regarding the bank overdraft.

 

 The Committee recommends that the Accounting Authority ensures that:

 

a)    Monthly reconciliations are completed on time in order to identify any unreconciled

        amounts so that errors can be identified and corrected before the audit process;

b)    Information and supporting documents are accurate and complete.

 

4. Receivables

 

The Auditor-General made the following findings:

 

a)   The existence, completeness, valuation and allocation to the value of R45 million of receivables stated at R86.5 million in note 7 to the financial statements due to the limitations as sufficient and appropriate audit evidence did not exist.

b)   The supporting documentation submitted to the audit was insufficient to verify the existence and accuracy of the accounts affected by the adjusting journal.

 

 The Committee recommends that the Accounting Authority ensures that:

 

a)   Internal controls in the finance section are implemented correctly and effectively ;

b)   A review of operations and processes is undertaken for SASSA to comply with regulations, policies and procedures; and

c)   Information and supporting documents are accurate and complete.

 

5. Inventory

 

The Auditor-General identified the following:

 

a)       Inventory stock on hand that was verified with a physical stock count could not be compared with the inventory on hand recorded in the system.

b)       SASSA did not account for any surpluses or shortages in the financial records for the 2009/10 financial year.

 

The Committee recommends that the Accounting Authority ensures that:

 

a)       SASSA understands the flow of accrual basis of accounting transactions from initiation to capturing of the inventory received and issuing of inventory items;

b)       The information and supporting documents that management provides are accurate and complete.

 

6. Accumulated deficit

 

The Auditor-General identified the following:

 

a)       The existence, completeness, valuation and allocation to the value of R13.7 million of the accumulated deficits stated at R884.1 million in the statement of changes in net assets due to the limitations as sufficient and appropriate audit evidence did not exist.

b)       The Agency’s records did not permit the application of alternative audit procedures regarding the accumulated deficit.

 

The Committee recommends that the Accounting Authority ensures that:

 

a)       The internal controls in the finance section are effective and implemented correctly; and

b)       Supporting documents are filed properly and be made available during the audit process.

 

 

 

7. Intangible assets

 

The Auditor-General identified the following:

 

a)       During the audit of intangible assets supporting documents could not be submitted for audit purposes.

b)       The Agency did not capitalise all development costs as required by the applicable reporting framework and could not provide the requested supporting documents.

 

The Committee recommends that the Accounting Authority ensures that:

 

The information and supporting documentation that management provides are accurate and complete.

 

8. Conclusion

 

The Committee expressed dissatisfaction with SASSA’s annual report as a result of numerical errors, especially but not limited to the Financial Statements and urged the entity to edit properly its report before printing so that such errors do not occur in future. SASSA should improve the controls over the safeguarding of source documentation. The Committee also recommends that staff of the Agency is trained on the Accrual Basis of Accounting.

 

The Committee further recommends that the Accounting 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.