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

Public Accounts (SCOPA)

DEPERTMENT OF CORRECTIONAL SERVICES

TWELFTH REPORT OF THE COMMITTEE ON PUBLIC ACCOUNTS ON THE REPORT OF THE AUDITOR GENERAL ON THE ANNUAL REPORTS AND FINANCIAL STATEMENTS OF THE COUNCIL FOR MEDICAL SCHEMES 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 Council for Medical Schemes (CMS).The Committee noted the unqualified audit opinion, highlighted areas which required the attention of the Accounting Authority, and reports as follows:

 

2. Compliance with laws and regulations

 

The Auditor-General identified the following:

 

a) The strategic plan of the entity was only prepared for one year and did not cover a three year period as required by Treasury Reglation (TR) 30.1.3;

b) The financial statements submitted for audit did not comply with section 40(1)(c) (i) of the Public Finance Management Act (PFMA). Material mistatements were identified during the audit; and

c) Goods and services with transactions value of over R500 000 were not procured by means of a competitive bidding process as required by section 51 (1)(b) of the PFMA.

 

The Committee recommends that the Accounting Authority ensures the following:

 

a) Competent people who understands the requirements of the Public Finance Management Act and the preparation of the strategic plan be employed; and

b) Responsible managers who fail to comply with the requirements of the Public Finance Management Act be held accountable.

 

3. Leadership

 

The Auditor-General identified that:

a) Policies and procedures were not developed and implemented to support the recording and reporting of performance against predetermined objectives.

 

The Committee recommends that the Accounting Authority ensures that:

a) Policies and procedures for reporting performance information are developed, approved and implemented.

 

4. Financial and performance management

 

The Auditor-General identified the following:

a) Internal controls were not adequately designed and implemented to support the reporting of predetermined objectives; and

b) Internal controls in place were not adequate to prevent and detect irregular expenditure.

 

The Committee recommends that the Accounting Authority ensures that:

a) Complete, accurate and valid reporting against predetermined objectives be available for audit purposes; and

b) Management develops and approves policies and procedures for reporting on performance information.

 

5. Supply Chain Management

 

The Auditor-General identified the following:

 

a) The entity did not meet all the requirements for effective procurement and contract management as well as controls to ensure a fair, equitable, transparent, competitive and cost effective supply chain management (SCM) that prevents and detects fraud, non-performance by suppliers and non-compliance with SCM legislation; and

b) Payments of R3 472 451 were made without following a competitive bidding process or sourcing three quotations.

 

The Committee recommends that the Accounting Authority ensures the following:

 

a) The Departmental Supply Chain Management Policy be updated to encompass all the elements of the Public Finance Management Act, Treasury Regulations, Preferential Procurement Framework Act, Preferential Procurement Regulations and Supply Chain Management Policy practice notes issued by the National Treasury that will ensure an appropriate procurement and provisioning system which is fair, equitable, transparent, competitive and cost effective; and

b) Internal audit scope with regards to Supply Chain Management Policy be increased to ensure that day to day controls are effectively implemented and all procurement comply with Supply Chain Management Policy legislative requirements.

 

6. Conclusion

 

The Committee recommends that the Executive Authority submits a progress report on all the above recommendations to the National Assembly within 60 working 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.