ATC120523: Report on Auditor General on the Annual Reports & Financial Statements of the Department of Health for the 2010/11 Financial Year, dated 23 May 2012

Public Accounts (SCOPA)

DEPERTMENT OF CORRECTIONAL SERVICES

TENTH REPORT OF THE COMMITTEE ON PUBLIC ACCOUNTS ON THE REPORT OF THE AUDITOR GENERAL ON THE ANNUAL REPORTS AND FINANCIAL STATEMENTS OF THE DEPARTMENT OF HEALTH FOR THE 2010/11 FINANCIAL YEAR, DATED 23 MAY 2012.

 

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 on the 2010/11 financial statements of the Department of Health. The Committee noted the qualified audit opinion, highlighted areas which required the attention of the Accounting Authority, and reports as follows:

 

2. Movable tangible capital assets

 

The Auditor-General identified the following:

 

a) Movable tangible capital assets as disclosed in note 29 to the financial statements at an amount of R130 111 000 and minor assets are disclosed in note 29.4 to the financial statements at an amount of R34 402 000. The asset register was undertaken in July 2011 to bar-code all assets and confirm the physical asset count with the assets register; and

b) Adequate audit assurance was not obtained relating to the valuation and allocation of assets as disclosed in the disclosure notes.There were no satisfactory alternative procedure that could be performed.

 

The Committee recommends that the Accounting Officers ensures the following:

 

a) Appropriate reconciliations are performed to confirm the accuracy of the matching of physical assets with assets that existed in the 2009/10 asset register; and

b) Assets are counted on a monthly basis.

 

3. Restatement of comparative figures

 

The Auditor-General identified that:

 

a) The comparative figures operating the lease of expenditure for buildings and other fixed structures for the year ended 31 March 2010 have been restated with an amount of R146 683 000 as a result of no lease commitment provision made in the previous year. This was corrected in the 2010/11 financial statements of the Department.

 

The Committee recommends that the Accounting Officer ensures the following:

 

a) All amendments to financial statements and information are effected before the annual audit commences.

 

4. Irregular expenditure

 

The Auditor-General identified the following:

 

As disclosed in note 23 to the financial statements, irregular expenditure to the amount of R43 274 000 (2010: R13 639 000) was incurred, as proper supply chain management processes were not followed.

 

The Committee recommends that the Accounting Officer ensures the following:

 

a) Officials follow the Supply Chain Management processes when they procure goods and services so as to avoid recurrence of irregular, fruitless and wasteful expenditure; and

b) Disciplinary action is taken against employees who were responsible for incurring such irregular expenditure as required by Section 51 (e) (iii) of the Public Finance Management Act.

 

5. Procurement and contract management

 

The Auditor- General identified that:

 

In certain instances, goods and services with a transaction value of between R10 000 and R500 000 were procured without inviting at least three written quotations from the prospective suppliers as per the requirements of Treasury Regulation 16A6.1 and National Treasury Practice Note 8 of 2007/08.

 

The Committee recommends that that Accounting Authority ensures the following:

 

a) Adequate training on policies and procedures is provided to all officials;

b) Compliance is monitored by relevant supervisors regularly; and

c) Disciplinary action be taken against officials who were found guilty contravening the Treasury Regulation 16A6.1 and National Treasury Practice Note 8 of 2007/8.

 

6. Conditional grant

 

The Auditor-General identified that:

 

The transferrring National Department did not adequately monitor expenditure and non-financial performance information on programmes funded by the allocation, as per the requirements of section 9 (1) (b)(i) of the Division of Revenue Act.

 

The Committee recommends that the Accounting Officer ensures the following:

 

a) The Provincial and National Departments monitor the financial and non-financial information as required by the Division of Revenue Act and grant frameworks;

b) Appropriate disciplinary actions is taken against officials who were responsible for non compliance with the Division of Revenue Act and grant frameworks; and

c) Monies that have not been used in accordance with what they were intended for should be refunded to the national fiscus by the said Provincial Departments.

 

7. Conclusion

 

The Committee 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.

 

The Committee further recommends that the Accounting Authority submits quarterly reports on all the above-mentioned recommendations.

 

 

Report to be considered.